what is the value of this inheritance to Elizabeth today?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Accounting
Elizabeth Brown just learned that she received an inheritance from her
grandmother. The inheritance provides for Elizabeth to receive $4400 per year
at the end of the year for each of the next 5 years. Assuming a discount rate of
8%, what is the value of this inheritance to Elizabeth today?
Type of Cash Flow
Periods
Interest Rate
Factor
PV of $1
8%
0.6806
FV of $1
8%
1.4693
PV ordinary annuity
8%
3.9927
FV ordinary annuity
8%
5.8666
PV annuity due
8%
4.3121
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