Question
Laura Hall just learned that she received an inheritance from her grandmother. The inheritance provides for Laura to receive $5600 per year at the end
Laura Hall just learned that she received an inheritance from her grandmother. The inheritance provides for Laura to receive $5600 per year at the end of the year for each of the next 4 years. Assuming a discount rate of 13%, what is the value of this inheritance to Laura today?
| Type of Cash Flow | Periods | Interest Rate | Factor |
|---|---|---|---|
| PV of $1 | 4 | 13% | 0.6133 |
| FV of $1 | 4 | 13% | 1.6305 |
| PV ordinary annuity | 4 | 13% | 2.9745 |
| FV ordinary annuity | 4 | 13% | 4.8498 |
| PV annuity due | 4 | 13% | 3.3612 |
$18823
$16657
$13223
$27159
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
11th Edition
1119594596, 978-1119594598
