Your crazy uncle left you a trust that will pay you $27,000 per year for the...

Your crazy uncle left you a trust that will pay you $27,000 per year for the next 20 years with the first payment received one year from today. If the appropriate interest rate is 4.7 percent, what is the value of the payments today?

Expert Solution

Solution :

At an appropriate interest rate of 4.7 percent, the value of the payments today is = $ 345,205.98

=$ 345,206 ( when rounded off to the nearest dollar )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 2 years ago

To your good fortune, your crazy aunt died and left you $200,000. She also left a fund...

To your good fortune, your crazy aunt died and left you $200,000. She also left a fund to provide for her dogs, there are three and they have needs. You estimate the dog bill to be $1,500 month for 5 yrs. The dog boarder offers a discount rate of 6.0% APR for early payment (use to discount). Assume you prepaid for Dog care today and invested the rest of the money at 7.0% EAR (m = 1) for 20 years. What is your account...

Your Uncle Paulie comes to you seeking advice on how to pay for college tuition for...

Your Uncle Paulie comes to you seeking advice on how to pay for college tuition for his two boys, Ivan who is 2 and Martin who is 6. He is set on Martin going to his alma mater, where tuition is currently $40,000. He wants Ivan to attend a local public university for 2 years, travel abroad at Ivan’s expense, and then finish his last two years at the local university. Tuition is currently $30,000. Because of the difference in...

On a trip home during the summer break, you pay your Uncle Davea visit at...

On a trip home during the summer break, you pay your Uncle Dave a visit at his record store. When you walk in, you notice there is not one single customer. “I have run this store since the 1980s,” Uncle Dave says with a sigh. “We were the first store in this whole town to sell compact discs! But now, it feels like we’re at least a decade or two behind the times. No one buys records anymore—or even CDs!...

On a trip home during the summer break, you pay your Uncle Dave a visit at...

On a trip home during the summer break, you pay your Uncle Dave a visit at his record store. When you walk in, you notice there is not one single customer. “I have run this store since the 1980s,” Uncle Dave says with a sigh. “We were the first store in this whole town to sell compact discs! But now, it feels like we’re at least a decade or two behind the times. No one buys records anymore—or even CDs!...

Suppose that you’ve just received some bonds from your crazy uncle Leroy. The first bond pays...

Suppose that you’ve just received some bonds from your crazy uncle Leroy. The first bond pays the holder of it $110 in exactly one year’s time. The second bond is a forever bond. It will pay $5 every year forever starting in one year’s time. The interest rate is 10%. What is the PDV of the two bonds?

In her will, your aunt set up a trust that is required to pay you the...

In her will, your aunt set up a trust that is required to pay you the sum of $5,000 a year forever with payments starting immediately. However, the news is better. She has specified that this $5,000 should grow at 5% per year. Given an interest rate of 12%, what is the PV of the inheritance? Please include formulas used. Thanks

Your grandparents would like to establish a trust fund that will pay you and your heirs...

Your grandparents would like to establish a trust fund that will pay you and your heirs $185,000 per year forever with the first payment 8 years from today. If the trust fund earns an annual return of 3.6 percent, how much must your grandparents deposit today? Smashed Pumpkins Co. paid $152 in dividends and $582 in interest over the past year. The company increased retained earnings by $486 and had accounts payable of $618. Sales for the year were $16,335...

Assume that you make $50,000 per year. You expect your pay to increase by 2.5% year...

Assume that you make $50,000 per year. You expect your pay to increase by 2.5% year from now until you retire in 30 years. Your goal is to withdraw an amount equal to 80% of your annual income at retirement each year for 25 years (assume withdrawals are made at the end of each year in retirement). How much would you have to invest each year from now until retirement if your investment returns are 8% per year while working...

Case Scenario Your favorite seventy-two-year-old Uncle Bob recently slipped on the ice and broke his left...

Case Scenario Your favorite seventy-two-year-old Uncle Bob recently slipped on the ice and broke his left hip. After surgery and a four-day hospital stay, the hospital is ready to discharge him. His physician believes Uncle Bob would benefit from a stay at a skilled nursing facility where he would receive skilled nursing, physical therapy and occupational therapy. The physician writes the order. Your Uncle Bob has Medicare A and Medicare B. Questions 1. Will Medicare cover his skilled nursing facility...

If you expect a firm to pay a $1.8 per year in perpetuity, your tax rate...

If you expect a firm to pay a $1.8 per year in perpetuity, your tax rate is 25%, and your required rate of return is 12.4%. How much are you willing to pay for its stock? Round answer to two decimal places.

Question