Answer the following question, show all working. Use a financial calculator if needed. DO NOT use excel: Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows: Years 1 – 3 $15,000 each year Year 4 to 6 $10,000 each year Year 7 $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
Answer the following question, show all working. Use a financial calculator if needed. DO NOT use excel: Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows: Years 1 – 3 $15,000 each year Year 4 to 6 $10,000 each year Year 7 $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 12EB: Your friend has a trust fund that will pay her the following amounts at the given interest rate for...
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Answer the following question, show all working. Use a financial calculator if needed. DO NOT use excel:
Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows:
Years 1 – 3 $15,000 each year
Year 4 to 6 $10,000 each year
Year 7 $25,000
Interest on the fund is 5%.
a) What is the present worth of this inheritance?
b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
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