Question 4 You inherit $554,000. You can receive the $554,000 in one lump sum payment today...
Question 4
You inherit $554,000. You can receive the $554,000 in one lump sum payment today or, alternatively, receive two amounts: $354,000 in 11 months and $220,000 in 21 months from today. If you can earn 5.7% per annum compounding monthly on your monies, what is the value of the option to receive two payments (in present day value)?
(to nearest whole dollar,; don’t use $ sign or commas)
Homework Answers
| Value of the option = 354000/(1+0.057/12)^11+220000/(1+0.057/12)^21 = | $ 5,35,181 |
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Question 4
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