Answered

Welcome to Westonci.ca, where you can find answers to all your questions from a community of experienced professionals. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

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

We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.