Your grandfather left you an inheritance that will provide an annual income for the next 20 years. You will receive the first payment one year from now in the amount of $2,500. Every year after that, the payment amount will increase by 6 percent. What is your inheritance worth to you today if you can earn 8.75 percent on your investments? Assume annual compounding.

Q: You are going to receive $50 at the end of each year for the next 6 years. If you invest each of…

A: The future value of the annuity is the future worth of a cash flow series at a certain rate of…

Q: You just paid $570,000 for an annuity that will pay you and your heirs $14,000 a year forever. What…

A: The fixed regular periodic payment made is regarded as an annuity. The annuity is broadly classified…

Q: Max purchases a lot for $300,000. Max will pay $25,000 dollars at the end of each year. the interest…

A: Using excel NPER function

Q: will receive a perpetuity of $34,000 per year forever, while curly will receive the same annual…

A: Present value is the equivalent value of money today of the future money based on the time value of…

Q: James plans to receive a monthly annuity of $1514 for the next 28 years as part of his inheritance.…

A: Here,Monthly Annuity (PMT) is $1514Time Period (n) is 28 yearsInterest Rate (r)  is 9.27%Compounding…

Q: Hamad will receive the following payments at the end of the next three years: AED 40,000, AED…

A: Given: Year 1 cash flows = AED 40,000 Year 2 cash flows = AED 50,000 Year 3 cash flows = AED 65,000…

Q: Your aunt promises to gift you $1,500 now, $1,700 one year from now, $1,900 two years from now, and…

A: The future value is reflective of the value of cash flows in the future after compounding them using…

Q: You will receive a ​$80,000 inheritance in 5 years. You could invest that money today at 7​%…

A: Future value = Present value ( 1 + Rate of interest ) TIme

Q: You will receive an inheritance of 116034 in 10 years.  If the interest rate is 3.8%, how much is it…

A: Time value of money is one of the important concept in finance. It says that a dollar amount…

Q: Your grandparents would like to establish a trust fund that will pay you and your heirs $210,000 per…

A: Present value:Present value is a financial concept that refers to the current worth of a future cash…

Q: An inheritance provides you with a $52,000 per year payment for the next 40 years. A 6.00% discount…

A: a) Present value annuity (PV) of an inheritance payment (P) of $52,000 for a period (n) of 40 years…

Q: If your trust fund promises to pay you $25, 000 on your 24th birthday (6years from today) and earns…

A: Present Value is the current worth of an amount to be received in future. To calculate the present…

Q: Fifteen years from now, you will be inheriting $45,000. What is this inheritance worth to you today…

A: Future value = $45,000Rate = 8.0%Number of years = 15

Q: You expect to receive a payout from a trust fund in 3 years. The payout will be for $11,000. You…

A: Receipt in 3 years (I) = $11,000 Interest rate (r) = 0.065 Future value (FV) = $19,000 Period for…

Q: Billy Bob just purchased an investment that will pay him $25,000, $20,000, and $10,000 over the next…

A: The problem is asking us to find out how much Billy Bob paid for his investment. The investment will…

Q: An inheritance of $400,000 will provide HOW MUCH at the end of each year for the next 20 years, at…

A: Data given:: PV= $400,000 n=20 years i= 7% (compounded annually)     Formula to be used: PV=…

Q: On your tenth birthday, you received $300 which you invested at 4.5 percent interest, compounded…

A: Initial investment (I) = $300 Interest rate (r) = 0.045 Worth now (AV) = $756 Period taken for $300…

Q: Frank plans to set aside money for his young daughter's college tuition. He will deposit money in an…

A: The Future Value of the Annuity refers to the sum value of all the payments which is occurred…

Q: Bill is the owner of an ordinary annuity that will pay him $12,000 at the end of each of the next…

A: solution Bill is the owner of an ordinary annuity that will pay him $12,000 at the end of each of…

Q: Your mother has an annuity that will give her monthly payments for 13 years. She tell you it is…

A: The present value of annuity due is calculated with the series of annuity payments which is…

Q: Your grandmother invested $1,000 for you the day you were born. How much will this investment be…

A: Data given: Principal (PV)=$1000 n=30 years Rate= 6% (compounded quarterly)   Required: FV of this…

Q: Tran Lee plans to set aside $1, 800 a year for the next six years, earning 4 percent. What would be…

A: An annuity refers to a series of cash flow that are usually fixed in nature and that occurs…

Q: You are contributing money to an investment account so that you can purchase a house in six (6)…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.