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Please post all the work, so I can understand the process :) -Nick got a $125...

Please post all the work, so I can understand the process :)

-Nick got a $125 a month for four years while attending college to earn his undergraduate degree. At a 6.5 percent discount rate, what were these payments worth to him on the day he started college.

A.

$5,201.16

B.

$5,270.94

C.

$5,509.19

D.

$5,608.87

E.

$5,800.00
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Answer #1

Ans B. $ 5270.94

Annuity PV Factor (End of Month) = P [ 1 - ( 1 + r )-n ]
        r
125* ( 1 - ((1 / (1 + 6.5%/12)^48)))
              6.5%/12
28.55090353
0.005416667
5270.94
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