You have just received an endowment and placed this money in a savings account at an...

You have just received an endowment and placed this money in a savings account at an annual rate of 13.58 percent. You are going to withdraw the following cash flows for the next five years.

End of year
1.   $7,512
2.   $8,140
3.   $4,455
4.   $3,122
5.   $1,857

How much is the endowment that you received?

Round the answer to two decimal places.

Solutions

Expert Solution

rate positively ..

We have to compute the present vlaue of the annual cash flow
	i	ii	iii=i*ii
year	Cash flow	PVIF @ 13.58%	Present value
1	7512	0.880437	$ 6,613.84
2	8140	0.775169	$ 6,309.87
3	4455	0.682487	$ 3,040.48
4	3122	0.600887	$ 1,875.97
5	1857	0.529043	$ 982.43
Present value =		$ 18,822.59

Ans =			$ 18,822.59

jeff jeffy answered 2 years ago

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