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A foundation announces that it will be offering one MIT scholarship every year for an indefinite number of years. The first scholarship is to be

A foundation announces that it will be offering one MIT scholarship every year for an indefinite number of years. The first scholarship is to be offered exactly one year from now (today is year 0, one year from now is year 1). When the scholarship is offered, the student will receive $20,000 annually for a period of four years, beginning from the date the scholarship is offered. This student is then expected to repay the principal amount received ($80,000) in 10 equal annual installments, interest-free, starting one year after the expiration of her scholarship. This implies that the foundation is really giving an interest-free loan under the guise of a scholarship. The current annual interest rate is 6% and is expected to remain unchanged.

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