A rich aunt has promised you $1,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 7% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 7%, what is her promise worth today? The present value is $ (Round to the nearest dollar.)

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
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A rich aunt has promised you $1,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment)
that is 7% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 7%, what is her promise
worth today?
The present value is $
(Round to the nearest dollar.)
Transcribed Image Text:A rich aunt has promised you $1,000 one year from today. In addition, each year after that, she has promised you a payment (on the anniversary of the last payment) that is 7% larger than the last payment. She will continue to show this generosity for 20 years, giving a total of 20 payments. If the interest rate is 7%, what is her promise worth today? The present value is $ (Round to the nearest dollar.)
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