Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows: Years 1 3 -- $15,000 each

Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows:

Years 1 3 -- $15,000 each year

Year 4 to 6 -- $10,000 each year

Year 7 -- $25,000

Interest on the fund is 5%.

a) What is the present worth of this inheritance?

b) Due to high liquidity interest rates have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investment Analysis And Portfolio Management

Authors: Frank K. Reilly, Keith C. Brown

9th Edition

0324656122, 978-0324656121

More Books

Students also viewed these Finance questions

Question

=+Show photos of consumers?

Answered: 1 week ago

Question

=+Exhibit children's artwork?

Answered: 1 week ago

Question

=+What kind of product or service would work in these locations?

Answered: 1 week ago