Question

Carl won 23,672 dollars that will be paid to him in full 6 years from now. Unfortunately, he needs cash right now to pay his credit card bill. Given that his monetary prize is transferable to someone else, Carl wants to sell it to his father today. Assume that the interest rate is 5% per year (compounded annually). How much money is Carl's father willing to pay him now for his future monetary prize

Answer 1

$17,664

Step-by-step explanation:

The amount of money that Carl father has to pay for his monetary prize occur in the future is shown below:

Present value = Amount paid × (P/F, 5%,6)

Present value = $23,672 × 0.7462153966

= $17,664

hence, the amount that willing to pay is $17,664 and the same is to be considered

We simply applied the above formula so that the correct value could come