# 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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Chapter 24 / Lesson 15Calculating 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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