Your rich uncle has just given you a high school graduation present of $900,000. The present,...
Your rich uncle has just given you a high school graduation present of $900,000. The present, however, is in the form of a 21-year bond with an annual interest rate of 6.4% compounded annually. The bond says that it will be worth $900,000 in 21 years. What is this gift worth at the present time? (Round your answer to the nearest cent.)
Homework Answers
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=900,000/1.064^21
=900,000*0.271785205
which is equal to
=$244,606.69(Approx).
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Your rich uncle has just given you a high school graduation
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