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5. Your great uncle recently died and left you $50,000 in his will. The lawyers tell will is complex and facing legal challenges and you cannot expect the money to be the end of the next three years. They also warn that the money is invested in some cannot be cashed out until five years from now. Your great uncle's bank pays an in 3% annually. What is the equivalent PV of that money today? What will it be wor of five years? Why does the value change over time?

5. Your great uncle recently died and left you $50,000 in his will. The lawyers tell will is complex and facing legal challenges and you cannot expect the money to be the end of the next three years. They also warn that the money is invested in some cannot be cashed out until five years from now. Your great uncle's bank pays an in 3% annually. What is the equivalent PV of that money today? What will it be wor of five years? Why does the value change over time?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5. Your great uncle recently died and left you $50,000 in his will. The lawyers tell you that the will is complex and facing legal challenges and you cannot expect the money to be paid before the end of the next three years. They also warn that the money is invested in some funds that cannot be cashed out until five years from now. Your great uncle's bank pays an interest rate of 3% annually. What is the equivalent PV of that money today? What will it be worth at the end of five years? Why does the value change over time?
Transcribed Image Text:5. Your great uncle recently died and left you $50,000 in his will. The lawyers tell you that the will is complex and facing legal challenges and you cannot expect the money to be paid before the end of the next three years. They also warn that the money is invested in some funds that cannot be cashed out until five years from now. Your great uncle's bank pays an interest rate of 3% annually. What is the equivalent PV of that money today? What will it be worth at the end of five years? Why does the value change over time?
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