You have just received an inheritance and as a result you will be getting 15 equal...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have just received an inheritance and as a result you will be getting 15 equal payments of $1 million each. The first payment will be received in 1 year and thereafter, the other 14 payments will be received every three years (that is, in year 4, 7, 10, etc.). The current annual interest rate of 10% will remain stable for the next 4 years and then it will increase to 15%. Calculate the present value of your inheritance. You have just received an inheritance and as a result you will be getting 15 equal payments of $1 million each. The first payment will be received in 1 year and thereafter, the other 14 payments will be received every three years (that is, in year 4, 7, 10, etc.). The current annual interest rate of 10% will remain stable for the next 4 years and then it will increase to 15%. Calculate the present value of your inheritance.
Expert Answer:
Answer rating: 100% (QA)
To calculate the present value of your inheritance we need to discount each of the future cash flows ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Explain and Give an example of genetic diversity, species diversity, and ecosystem diversity.
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
4 pts A lottery winner will receive $0.5 mulhon at the end of each of the next se yearn. What is the future value of her winnings at the time of her final payment, given that the interest rate is 6%...
-
Hail is produced in severe thunderstorms when an updraft draws moist surface air into subfreezing air above 10,000 feet. The speed of the updraft s, in mph, affects the diameter of hail (in inches)....
-
How might the following business specialists use learning curves: accountants, marketers, financial analysts, personnel managers, and computer programmers?
-
Assuming nominal annual yields of \(700,000,5,500,000\), and \(3,800,000 \mathrm{~kg} / \mathrm{km}^{2}\) for corn grain, sugar cane, and sweet sorghum respectively, which conversion pathway is the...
-
On January 2, Manning Co. purchases and installs a new machine costing $324,000 with a five-year life and an estimated $30,000 salvage value . Management estimates the machine will produce 1,470,000...
-
Calculate earnings per share for Groom Corporation for the year ended December 31, 2001. 9. Binji Company had net income of $862,500 for the year ended December 31, 2001. At the beginning of the year...
-
Joseph and Diane Smith 1580 West Street Chatham, VA 24531 Joseph and Diane are both 35 and have no dependents. If your clients receive a refund, they want the full amount refunded to them. Diane is...
-
Payroll Expenses: Overpayment of overtime. Account Payable: Payments made twice to the same supplier. Fixed Assets: wrong calculation to the depreciation. Required: Determine the key assertion at...
-
True or False? If you answer False, correct the statement. 1. An array is a random-access structure. 2. A sequential list is a random-access structure. 3. A linked list is a random-access structure....
-
As a college student and an active consumer, you may have considered one or more of the following questions at some point in the past few years: What criteria distinguish the top-rated MBA programs...
-
The speed of a bullet can be measured by firing it at a wooden cart initially at rest and measuring the speed of the cart with the bullet embedded in it. Figure P4.80 shows a \(12-\mathrm{g}\) bullet...
-
The management revolt at Meetup Inc. broke into the open last February. Douglas Atkin, a senior manager, yanked CEO Scott Heiferman into a conference room and showed him a list scrawled on a...
-
Think of a group you belong to that does not have an official leader. Most such groups will have an informal leader. Picture that person as you answer the following questions. When you are finished,...
-
How do you qualify for a mortgage? What are the four basic building blocks of a car loan and why is this important to understand?
-
A copper rod of length L =18.0 in is to be twisted by torques T (see figure) until the angle of rotation between the ends of the rod is 3.08. (a) If the allowable shear strain in the copper is 0.0006...
-
During 2012, Tom sold Sears stock for $10,000. The stock was purchased 4 years ago for $13,000. Tom also sold Ford Motor Company bonds for $35,000. The bonds were purchased 2 months ago for $30,000....
-
Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2012, Owen and Lisa exchange business pickup...
-
On February 2, 2012, Alexandra purchases a personal computer for her home. The computer cost $3,000. Alexandra uses the computer 80 percent of the time in her accounting business, 10 percent of the...
-
Compare different cooling schedule of simulated annealing.
-
Discuss the perturbation mechanism of simulated annealing.
-
What are the pros and cons of GA and SA? Can we conceive of a framework that combines the best of both worlds?
Study smarter with the SolutionInn App