Present Value

1. Your rich uncle died and left you an inheritance of $500,000. However, he is afraid you will blow the money if you receive it now, so he stipulates you will not receive it until 10 years from now. Learning time value of money, you realize it’s possible to make a contract to sell this future payment to a bank or hedge fund. If the interest they (or you) can earn over the next 10 years is 4%, then how much is this inheritance worth today (this would be the price you could sell it for today)?

Answer rating: 100% (QA)

Future value of inheritanceFV50000... View the full answer