4.2 Calculating Present Values Suppose you have just celebrated your 19th birthday. A rich uncle set up a trust fund for you that will pay you $100,000 when you turn 25 If the relevant discount rate is 11 percent, how much is this fund worth today? (See

4.2 Calculating Present Values Suppose you have just celebrated your 19th birthday. A rich uncle set up a trust fund for you that will pay you $100,000 when you turn 25 If the relevant discount rate is 11 percent, how much is this fund worth today? (See

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

pays 8 percent interest. How much will you have in four years? (See Problem 2.)
Calculating Present Values Suppose you have just celebrated your 19th birthday.
A rich uncle set up a trust fund for you that will pay you $100,000 when you turn 25.
If the relevant discount rate is 11 percent, how much is this fund worth today? (See
Problem 3.)
4.2
You'uo h0on offered an investment that will double

Expert Solution

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The worth of the fund today can be calculated with the help of present value function

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