CH6 Your grandfather is gifting you $250 a month for four years while you attend college....

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CH6 Your grandfather is gifting you $250 a month for four years while you attend college....

CH6

Your grandfather is gifting you $250 a month for four years while you attend college. If you discount those payments at 0.4% a month , what are these payments worth to you on the day you enter college?

Group of answer choices

10,898.56

$10,201.19

$10,308.87

$9,870.67

business finance

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Answer 1

Answer #1

FV of Annuity = CF * [ (1+r)^n - 1 ] / r

= $ 250 [ (1+0.004)^48 - 1 ] / 0.004

= $ 250 [ (1.004)^48 - 1 ] / 0.004

= $ 250 [ 1.2112 - 1 ] / 0.004

= $ 250 [ 0.2112 ] / 0.004

= $ 13200.41

Pls comment, if any further assistance is required.

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Answer 2

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CH6 Your grandfather is gifting you $250 a month for four years while you attend college....

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