It is your birthday today. Your grandparents surprise you with the following announcement. They have no gift
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It is your birthday today. Your grandparents surprise you with the following announcement. They have no gift for you today, but will give you a check for $ on your next birthday. They will also give you checks for $ and $ on the two following birthdays. What is the total value today of your grandparent's checks?
Explain your solution strategy by answering the following questions:
i Does this problem involve a lump sum, an annuity, or an uneven stream of cash flows?
ii Does it involve present values or future values
iii. Draw a timeline of the cash flows mentioned in the problem statement. Review the timelines in your textbook chapter if required.
iv What additional information would you need to provide a numerical answer for the question asked?
v Assuming you had that additional piece of information, how would you answer the question, What is the total value today of your grandparent's checks? Indicate the location of this value on your time line.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: