(1 point) Your rich uncle bequests to you a continuous, constant income stream of $9000...
60.1K
Verified Solution
Link Copied!
Question
Accounting
(1 point) Your rich uncle bequests to you a continuous, constant income stream of $9000 per year for the next 5 years. The terms of the bequest require that this income stream be paid continuously into a specific savings account that will not be available to you for 5 years. This account earns 5.8% interest, compounded continuously. What is the present value of the bequest? How much money would the bequest be worth (including all interest accrued) after 5 years? ! You discover that a bank is offering 6.3% interest compounded continuously on a certificate of deposit (CD) that matures in 5 years. What is the cost of a CD at the above interest rate that would provide the same amount of money as the bequest after 5 years? Because the CD earns more interest than the savings account specified in the Will, you feel that you are losing out on interest. So you ask the executor of the estate to use funds from the estate to buy a CD that will be worth the same as the bequeathed income stream in 15 years. You ask her to pay you today the difference between the present value of the original bequest and the amount invested in the CD. How much should she pay you today
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
