Trish receives $450 on the first of each month. Josh receives $450 on the last day of each month. Both Trish and Josh will receive payments for next four years. At a discount rate of 9.5 percent, what is the difference in the present value of these two sets of payments?

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The difference in present value arises because Trish receives her payments at the beginning of each month, while Josh receives his at the end. This means Trish's payments are effectively one month ahead in terms of compounding, making each of her payments slightly more valuable in present value terms. To calculate the exact difference, you would use the formula for the present value of an annuity due (for Trish) and an ordinary annuity (for Josh), applying the given discount rate. The calculation involves discounting each payment back to the present value at the 9.5% annual rate, converted to a monthly rate for the 48 payments. The difference in total present value between the two streams of payments, given the conditions and the rate provided, is $141.80.

Trish Receives $450 on the First of Each Month