It's a reflection of the time value of money. TMCC gets to use the $24,099. If TMCC uses it wisely, it will be worth more than $100,000 in thirty years.
Because they understand that the present value of $100,000 is the same or lower than the current $24,099 if discounting rate is≥ 4.86%
To find this discounting rate:
Present value of $100,000 payment 30 years ≤ $24,099
Interest Rate:
$100,000/(1+rate)^30 ≤ $24,099
(1+rate)^30 ≥ 100,000/24,099
(1+rate)^30 ≥ 4.15
(1+rate) ≥ 4.15^(1/30)
(1+rate) ≥ 1.05
rate ≥ 1.0486 – 1
rate ≥ 0.0486
Rate ≥ 4.86 %
Thus, TMCC gets to use the $24,099. If TMCC uses it wisely, it will be worth more than $100,000 in thirty years.
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