The first table gives the present value of $1 at the end of different time periods, given different interest rates. For example, at an interest rate of 10%, the present value of $1 to be paid in 20 years is $0.149. At 10% interest, the present value of $1,000 to be paid in 20 years equals $1,000 times 0.149, or $149. The second table gives the present value of a stream of payments of $1 to be made at the end of each period for a given number of periods. For example, at 10% interest, the present value of a series of $1 payments, made at the end of each year for the next 10 years, is $6.145. Using that same interest rate, the present value of a series of 10 payments of $1,000 each is $1,000 times 6.145, or $6,145.

Table 13.3 Present Value of $1 to Be Received at the End of a Given Number of Periods

	Percent Interest
Period	2	4	6	8	10	12	14	16	18	20
1	0.980	0.962	0.943	0.926	0.909	0.893	0.877	0.862	0.847	0.833
2	0.961	0.925	0.890	0.857	0.826	0.797	0.769	0.743	0.718	0.694
3	0.942	0.889	0.840	0.794	0.751	0.712	0.675	0.641	0.609	0.579
4	0.924	0.855	0.792	0.735	0.683	0.636	0.592	0.552	0.515	0.442
5	0.906	0.822	0.747	0.681	0.621	0.567	0.519	0.476	0.437	0.402
10	0.820	0.676	0.558	0.463	0.386	0.322	0.270	0.227	0.191	0.162
15	0.743	0.555	0.417	0.315	0.239	0.183	0.140	0.180	0.084	0.065
20	0.673	0.456	0.312	0.215	0.149	0.104	0.073	0.051	0.037	0.026
25	0.610	0.375	0.233	0.146	0.092	0.059	0.038	0.024	0.016	0.010
40	0.453	0.208	0.097	0.046	0.022	0.011	0.005	0.003	0.001	0.001
50	0.372	0.141	0.054	0.021	0.009	0.003	0.001	0.001	0	0

Table 13.4 Present Value of $1 to Be Received at the End of Each Period for a Given Number of Periods

	Percent Interest
Period	2	4	6	8	10	12	14	16	18	20
1	0.980	0.962	0.943	0.926	0.909	0.893	0.877	0.862	0.847	0.833
2	1.942	1.886	1.833	1.783	1.736	1.690	1.647	1.605	1.566	1.528
3	2.884	2.775	2.673	2.577	2.487	2.402	2.322	2.246	2.174	2.106
4	3.808	3.630	3.465	3.312	3.170	3.037	2.910	2.798	2.690	2.589
5	4.713	4.452	4.212	3.993	3.791	3.605	3.433	3.274	3.127	2.991
10	8.983	8.111	7.360	6.710	6.145	5.650	5.216	4.833	4.494	4.192
15	12.849	11.718	9.712	8.559	7.606	6.811	6.142	5.575	5.092	4.675
20	16.351	13.590	11.470	9.818	8.514	7.469	6.623	5.929	5.353	4.870
25	19.523	15.622	12.783	10.675	9.077	7.843	6.873	6.097	5.467	4.948
30	22.396	17.292	13.765	11.258	9.427	8.055	7.003	6.177	5.517	4.979
40	27.355	19.793	15.046	11.925	9.779	8.244	7.105	6.233	5.548	4.997
50	31.424	21.482	15.762	12.233	9.915	8.304	7.133	6.246	5.554	4.999

QUESTION: Mark Jones is thinking about going to college. If he goes, he will earn nothing for the next four years and, in addition, will have to pay tuition and fees totaling $10,000 per year. He also would not earn the $25,000 per year he could make by working full time during the next four years. After his four years of college, he expects that his income, both while working and in retirement, will be $20,000 per year more, over the next 50 years, than it would have been had he not attended college. Should he go to college? Assume that each payment for college and dollar of income earned occur at the end of the years in which they occur. Ignore possible income taxes in making your calculations. Decide whether you should attend college, assuming each of the following interest rates:

A) 2%

B) 4%

C) 6%

D) 8%