Your parents are giving you $260 a month for 4 years while you are in college. A
ID: 2777012 • Letter: Y
Question
Your parents are giving you $260 a month for 4 years while you are in college. At a 7 percent discount rate, what are these payments worth to you when you first start college-$12,480.00 -$10,586.65 -$9,128.00 -$10,857.65 -$11,166.65 Your parents are giving you $260 a month for 4 years while you are in college. At a 7 percent discount rate, what are these payments worth to you when you first start college
-$12,480.00 -$10,586.65 -$9,128.00 -$10,857.65 -$11,166.65
-$12,480.00 -$10,586.65 -$9,128.00 -$10,857.65 -$11,166.65
Explanation / Answer
Future Value = Present Value ( 1+r)n
FV = Cash Flow(PVAF, 7%, life)
7% /12 = .583333 per month
FV = 260(1.00583333)48
=12480
The correct answer is A. $ 12480
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