Question
Lisa Anderson just learned that she received an inheritance from her grandmother. The inheritance provides for Lisa to receive $6000 per year at the end
Lisa Anderson just learned that she received an inheritance from her grandmother. The inheritance provides for Lisa to receive $6000 per year at the end of the year for each of the next 5 years. Assuming a discount rate of 11%, what is the value of this inheritance to Lisa today?
| Type of Cash Flow | Periods | Interest Rate | Factor |
|---|---|---|---|
| PV of $1 | 5 | 11% | 0.5935 |
| FV of $1 | 5 | 11% | 1.6851 |
| PV ordinary annuity | 5 | 11% | 3.6959 |
| FV ordinary annuity | 5 | 11% | 6.2278 |
| PV annuity due | 5 | 11% | 4.1024 |
$22175
$24614
$37367
$18614
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Accounting What The Numbers Mean
Authors: David Marshall, Wayne McManus, Daniel Viele
10th Edition
77729870, 9780077729875
