Question
You have a lot of uncles that are dying and leaving you inheritances. Uncle 1 died today and left you $10,000. Uncle 2 will die
You have a lot of uncles that are dying and leaving you inheritances.
Uncle 1 died today and left you $10,000.
Uncle 2 will die in 2 years and will leave you another $10,000.
Uncle 3 will die in 5 years and will leave you yet another $10,000.
Uncle 4 is doing fine but in the spirit of the others, has signed a will leaving you $10,000 to be given to you in 6 years from now
. Uncle 5 is also doing well. He will give you $25,000 in 8 years from now under the condition that today you donate $5,000 to a finance program
. Assume these promises are good as gold in other words, you are certain that they will happen. Assume that the interest rate is 5% per year. Assume your aunt Petunia is willing you to front you a lump sum of money in exchange for all these inheritances. In other words, Petunia is going to buy these cash flows from you. What price should you charge Petunia? Solve this problem using both NPV and PV. Your answers should be positive numbers. (This spreadsheet should solve this specific problem only.)
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