Question

Your grandmother left you $90,000 that you'll receive when you turn 40 in 18 years. Since you'd rather have some money now, you want to sell your claim to the inheritance. Attempt 1/10 for 10 pts. Part 1 What is the minimum amount that you should sell your claim for now if the interest rate is 5%

Answer 1

The minimum amount to sell the claim is =$37,396.85

Step-by-step explanation:

The minimum amount is the present value of the the expected future sum discounted at the rate of 5%.

PV = FV × (1+r)^(-n)

FV - 90,000, r- 5%, n- 18

= 90,000 × (1.05)^(-18)

= 37,396.85

The minimum amount to sell the claim is =$37,396.85