Mary-Beth is planning to live in a university residence for four years while completing her degree. The

Question:

Mary-Beth is planning to live in a university residence for four years while completing her degree. The annual cost for food and lodging is $5,800 and must be paid at the start of each school year. What is the total present value of Mary-Beth’s residence fees if the (interest rate) is 6 percent per year?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...