Present value of grandparents trust fund
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In 10 years you will begin receiving $155 dollars per year in perpetuity from your grandparent's family trust fund (first payment is exactly 10 years from today). You consider these payments essentially risk free and have decided to discount them at a constant risk free rate of 6.5%. What is the present value today of these future cash flows? (Hint: draw a time line to illustrate exactly the cash flows for this problem.)
a. 1353
b. 2385
c. 1270
d. 146
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Solution Summary
The present value of grandparents trust fund is determined.
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- BA, Ain Shams University, Cairo Egypt
- MBA, California State University, Sacramento
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