6. 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 rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
6. 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 rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the market change?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![6. 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 rate have dropped to 4%. What will be the impact on the
present worth of this inheritance as a consequence of the market change?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F094daf75-121a-4fd9-bdc1-5512d33f62c1%2Ff263f655-173c-44a0-941d-e5fa37744f24%2Fuafenoe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:6. 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 rate have dropped to 4%. What will be the impact on the
present worth of this inheritance as a consequence of the market change?
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