You have just received an endowment and placed this money in a savings account at an annual rate...
Question:
You have just received an endowment and placed this money in a savings account at an annual rate of 19.74%. You are going to withdraw the following cash flows for the next five years.
End of year:
1) $1,163
2) $7,764
3) $ 2,449
4) $4,107
5) $7,162
How much is the endowment that you received?
Present Value:
Present value is the value of a future payment measured in today's dollars. In other words, it is the nominal amount individuals would take today instead of the future payment. The present value of a future payment is usually smaller than the face value of the future payment, and the difference is attributed to the time value of money.
Answer and Explanation: 1
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View this answerThe value of the endowment is $12,720.38.
The size of the endowment is the present value of the future withdrawals, discounted at the return on the...
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How to Calculate Present Value of an Investment: Formula & Examples
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Chapter 24 / Lesson 15
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Calculating the present value of an investment tells how much money needs to be saved now in order to reach a desired, future amount. Explore the definition of and formula for the present value of an investment, and see examples.
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