Dwoods6140 Dwoods6140

09-07-2020
Business

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Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,400 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today

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ewomazinoade ewomazinoade

09-07-2020

Answer:

$3,315.13

Explanation:

To determine the amount of inheritance Marshall should invest today, we have to calculate the present value of $5,400.

PV = FV (1 + r)^-n

FV = Future value = $5,400

P = Present value

R = interest rate 5%

N = number of years 10

$5400(1.05^-10) = $3,315.13

I hope my answer helps you

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