Question

You expect to receive an inheritance in 8 years amounting to $250,000. Your discount rate is 6% annually. How much is this investment worth today?

Answer 1

the present value is $156,853.0928

Step-by-step explanation:

The computation of the present value is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^number of years

$250,000 = Present value × (1 + 0.06)^8

$250,000 = Present value × 1.06^8

Now the present value is

= $250,000 ÷ 1.06^8

= $156,853.0928

Hence, the present value is $156,853.0928