Score: 0 of 1 pt 14 of 15 (5 complete) ? , HW Score: 13.33%, 2 Problem 3.LO3.19

Question

Score: 0 of 1 pt 14 of 15 (5 complete) ? , HW Score: 13.33%, 2 Problem 3.LO3.19 (similar to) Question Help A y promises to pay Opie $3,500 when Opie graduates from Mayberry University in 13 years. How much must Andy deposit today to make good on his promise, if he can earn 6% on his investments? How much must Andy deposit today to make good on his promise? (Round to the nearest cent) 15 of 15 (5 complete) Hw Score: 13.33%, core: 0 of 1 pt roblem 3.LO3.21 (similar to) You will receive a $120,000 inheritance in 6 years. You could invest that money today at 11% > Question Help compounded semi-annually. What is the present value of your inheritance? What is the present value of your inheritance? (Round to the nearest cent)

Explanation / Answer

Problem 3.LO3.19

In given instance, Andy need $3,500 at the end of 13th year and he can deposit sum today at 6%. Tht means we need to find present value of $3,500 which is as follows-

$3500/(1+.06)13

$1640.94

Problem 3.LO3.19

Here the effective interest rate is 5.5%(11%/2) and period is 12(6*2)

Present value of inheritance is calculated as follows-

$120,000/(1+.055)12

$63,117.77

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