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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 of the market change?

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jeff jeffy answered 2 years ago
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