Purchase Solution

Your grandfather gives you three options for an inheritance

Not what you're looking for?

Ask Custom Question

Your grandfather wants to award to you the portion of his estate allocated to you as an inheritance. He gives you three options to receive your cash: 1) $5,000 today; 2) $1,000 per year for the next eight years; or 3) $12,000 at the end of eight years. The intermediate-term money market is currently paying 11%.

Which inheritance option would be best? Why? How might your decision change if the money market is paying 12%?

Must show your work - you must apply objectives means to arrive at a conclusion. If you used Excel, list the formula you used to arrive at your answer. If you used a financial calculator, list the key strokes you used. Lastly, if you used the time value values in the appendix or used the time value formulas, show your calculations.

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation to answer which inheritance option would be best, and why or how might your decision change if the money market is paying 12%.

Solution Preview

Your grandfather wants to award to you the portion of his estate allocated to you as an inheritance. He gives you three options to receive your cash: 1) $5,000 today; 2) $1,000 per year for the next eight years; or 3) $12,000 at the end of eight years. The intermediate-term money market is currently paying 11%.

Which inheritance option would be best? Why? How might your decision change if the money market is paying 12%?

must show your work - you must apply objectives means to arrive at a conclusion. If you used Excel, list the formula you used to arrive at ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

View More Free Quizzes
Related BrainMass Solutions

  • Financial Decison Case Study

    He investigated a couple of options and is asking for your help as a financial planning intern to determine the financial consequences associated with each option.

  • Human Genetics Quiz

    13623 Human Genetics Quiz Exams are approaching quickly and for review, can you please provide the correct answers for the following multiple-choice quiz on human genetics, along with an explanation of the correct answer. Thank you!

  • Inheritance Decisions: Opportunity Cost

    80481 Inheritance Decisions: Opportunity Cost Your uncle has given you three alternatives for your inheritance. You can have $12,000 now; $2,000 per year for the next eight years; or $18,000 at the end of eight years.

  • I am having a hard time with this! Please help and show work!

    Your rich grandfather has offered you a choice of one of the three following alternatives: $10,000 now; $2,000 a year for eight years; $24,000 at the end of eight years. Assuming you could earn 11% annually, which alternative should you choose?

  • What type of business entity should you form

    You also foresee a lucrative international market and franchise opportunities. You have two options for capital: use your inheritance, which includes a multimillion-dollar home, or allow your two rich friends to join the business.

  • Inheritance alternative

    78959 Inheritance Alternative Present and future value calculations Your uncle has given you three alternatives for your inheritance. You can have $5,000 now; $1,000 per year for the next eight years; or $12,000 at the end of eight years.

  • Understanding Traditional and non traditional layot

    It could also include framing class webinars and videos for remote customer who might order product and assemble themselves. • It was great of your grandfather to deed the building to you as part of your inheritance.

  • Which inheritance alternative would be best? Why?

    58662 Which inheritance alternative would be best? Why? Your uncle has given you three alternatives for your inheritance. You can have $5,000 now; $1,000 per year for the next eight years; or $12,000 at the end of eight years.

  • Three alternatives for inheritance

    161364 Your uncle has given you three alternatives for your inheritance. Your uncle has given you three alternatives for your inheritance. You can have $10,000 now; $2,000 per year for the next eight years; or $24,000 at the end of eight years.

View More Related Solutions