Question

In: Finance

You receive an inheritance of $100,000. However the terms of the bequest specify that you cannot...

  1. You receive an inheritance of $100,000. However the terms of the bequest specify that you cannot take possession of the cash until the sum has grown to $250,000.  The money is being held in trust for you in an account that is currently paying 10%, compounded quarterly.  The bank where the account is held guarantees the rate is fixed for the first five years, but thereafter may increase, but will not decrease.  If the interest rate increases, the increase will not be more than 200 basis points (2%) above the current rate (total, ever).  What is a) the soonest, and b) the latest you will be able to claim your inheritance?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -


Related Solutions

Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the...
Your grandfather left an inheritance for you of $100,000. However, you can only drawdown on the investment as follows: Years 1 – 3 -- $15,000 each year Year 4 to 6 -- $10,000 each year Year 7 -- $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rates have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence...
6. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on...
6. Your grandfather left an inheritance for you of $100,000. However you can only drawdown on the investment as follows: Years 1 – 3 $15,000 each year Year 4 to 6 $10,000 each year Year 7 $25,000 Interest on the fund is 5%. a) What is the present worth of this inheritance? b) Due to high liquidity interest rate have dropped to 4%. What will be the impact on the present worth of this inheritance as a consequence of the...
At the reading of the will, you learn that your inheritance will allow you to receive...
At the reading of the will, you learn that your inheritance will allow you to receive the amount of $480 at the end of each year for a total of 13 consecutive years. However, because of your young age, these amounts will not begin until the end of 6 years. If the interest rate is 7%, what is the equivalent present value of the inheritance?
At the reading of the will, you learn that your inheritance willallow you to receive...
At the reading of the will, you learn that your inheritance will allow you to receive the amount of $410 at the end of each year for a total of 15 consecutive years. However, because of your young age, these amounts will not begin until the end of 7 years. If the interest rate is 8%, what is the equivalent present value of the inheritance?
You are expecting to receive an inheritance in 6 months and wish to use a long...
You are expecting to receive an inheritance in 6 months and wish to use a long position in a forward contract to pre-invest the proceeds. A dealer offers a forward contract for 1,000 shares of Gargantuan Industries. The current price of Gargantuan is $89 per share and Gargantuan is expected to pay dividends per share over the next 6 months with a present value of $4.56 per share. If the risk-free rate is 3.80% compounded annually, what is the no-arbitrage...
You will receive a $250,000 inheritance in 2 years. An insurance company says it will give...
You will receive a $250,000 inheritance in 2 years. An insurance company says it will give you $210,000 today to sign over the future inheritance. If you could earn 10% on the money, would you be better off taking the deal?
You receive an inheritance of a thirty-year annuity, which pays 1 at the end of the...
You receive an inheritance of a thirty-year annuity, which pays 1 at the end of the first year, 2 at the end of the second year, 1 at the end of the third year, 4 at the end of the fourth year, 1 at the end of the fifth year, etc. This pattern will continue such that 1 will be paid out at the end of 29th year and 30 will be paid out at the end of the 30th...
Define and describe the following terms: Will, Testator/Testatrix, Bequest and Testamentary capacity. and describe how a...
Define and describe the following terms: Will, Testator/Testatrix, Bequest and Testamentary capacity. and describe how a valid last Will and Testament can be created under laws of New York State.
EMH says that you cannot make a return that will consistently beat the market. However, there...
EMH says that you cannot make a return that will consistently beat the market. However, there are behavioural and institutional reasons why that may not be the case. You should try to identify a few of those so that you can justify your attempt to beat the market. This is not a passive strategy, you are seeking out stocks to buy and stocks to sell. Walmart beating the Market and Target beating the market. Is the market value fair? What...
EMH says that you cannot make a return that will consistently beat the market. however, there...
EMH says that you cannot make a return that will consistently beat the market. however, there are behavioral and institutional reasons why that may not bethe case. by using efficient market hypothesis, how can Walmart beat the market by inefficiency? and how can Target Corp beat the market by inefficiency? identify few strategies of emh theory so you can justify your attempt to beat the market. this is not a passive strategy, you are seeking stocks to buy and stocks...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT