Answered

Discover the best answers at Westonci.ca, where experts share their insights and knowledge with you. Connect with a community of experts ready to provide precise solutions to your questions quickly and accurately. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

A wealthy man just died and left his pet dogs the following estate: $20,000 per year for the next 11 years with the first cash flow today. at a discount rate of 4. 2%, what is the doggy estate worth in today's dollars?

Sagot :

ajeigbeibraheem

The concept of present value lets us know that the doggy estate worth in today's dollars is $180614.80

What is the present value of the doggy estate worth?

The concept of present value is significant because it enables investors to determine whether the amount they pay for an investment is reasonable. The present value of a future cash flow defines how much it is worth in today's value.

From the given information:

  • The annual cashflow C = $20,000
  • Interest rate (i) = 4.2% = 0.042
  • Number of period (n) = 11

Thus, the present value of the doggy estate can be calculated by using the formula;
[tex]\mathbf{PV = C \times \Big [ \dfrac{1 - \dfrac{1}{(1+i)^n}}{i}\Big] \times (1+i)}[/tex]

[tex]\mathbf{PV = 20000 \times \Big [ \dfrac{1 - \dfrac{1}{(1+0.042)^{11}}}{0.042}\Big] \times (1+0.042)}[/tex]

PV = $180614.80


Learn more about how to calculate the Present value here:

https://brainly.com/question/15904086

Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.