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The method are supposed to return a value. You use the return statement to do that.

Reread the specifications for the determineGrade method. Yours is all wrong.

Yes, you define the methods outside of the main method.
No method can be defined inside of another method.

For more info on how to use methods see the Tutorial. Go to this site and Find methods:
Trail: Learning the Java Language: Table of Contents (The Java™ Tutorials)

Assuming you have the arguments: arg1, arg2, ...

You call a method: methodName(arg1, arg2, ...);

Replace the ... with more args or remove them.

Put that code inside of the main method.

I'm not sure of your terminology. The "pass it to" part is confusing.
The main method would call the two sub methods and pass them the necessary values as arguments.

Do you have any specific questions about your assignment?