Question Your Grandfather left you an inheritance that will provide an annual income for the next...
Question:
Question Your Grandfather left you an inheritance that will provide an annual income for the next 20 years. You will receive the first payment one year from now in the amount of $16,500. Every year after that, the payment amount will increase by 5 percent. What is your inheritance worth to you today if you can earn 7.5 percent on your investments?
A. $247,750
B. $286,667
c. $231,211
D.$354,612
E.$308,974
Time Value of Money:
Time value of money theory states that if we have to receive a certain amount of money, the sooner we receive the better as the amount of money accumulates interest as time passes and hence the money increases.
Answer and Explanation: 1
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View this answerThe correct choice is Option A.
Present Value = Future Value / (1 + Rate)^Number of years
Present value of all the cash flows with growth of 5%, @...
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