Thuan is expecting to inherit $117,000.00 6 years from now. The interest rate is ¡(4) = 11.450%. What is the (present or future) value of his inheritance 7.0 years from now? O a. $159,798.98 O b. $166,348.12 O c. $130,982.77 O d. $148,010.53 O e. $157,179.32 Certainty OC=1 (Unsure: <67%) OC-2 (Mid: >67%) OC-3 (Quite sure: >80%)
Thuan is expecting to inherit $117,000.00 6 years from now. The interest rate is ¡(4) = 11.450%. What is the (present or future) value of his inheritance 7.0 years from now? O a. $159,798.98 O b. $166,348.12 O c. $130,982.77 O d. $148,010.53 O e. $157,179.32 Certainty OC=1 (Unsure: <67%) OC-2 (Mid: >67%) OC-3 (Quite sure: >80%)
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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9. the math of interest. please indicate if you are unsure or totally sure about the answer
Transcribed Image Text:Thuan is expecting to inherit $117,000.00 6 years from now. The interest rate is i(4) = 11.450%. What is the
(present or future) value of his inheritance 7.0 years from now?
O a. $159,798.98
O b. $166,348.12
O c. $130,982.77
O d. $148,010.53
O e. $157,179.32
Certainty OC=1 (Unsure: <67%) OC-2 (Mid: >67%) OC=3 (Quite sure: >80%)
Expert Solution
Information;
Amount in 6 years (P6) = $117,000
Quarterly interest rate (r) = 0.028625 (i.e. 0.1145 / 4)
Quarterly period (n) = 4 (i.e. (7years - 6years) * 4)
Future value (FV) 7years from now = ?
We have amount for 1 year (4 quarters) only.
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