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Chapter 4: Q14BP (page 282)

Question: Phil Goode will receive $175,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the present value of his future 鈥減ot of gold鈥�?

Short Answer

Expert verified

The present value is $249.92.

Step by step solution

01

Identification of the required information

Future value (FV) = $175,000

Period (n) = 50 years

Interest Rate (i) = 14%

02

Present value (PV)

PV=FV脳1+i-n=$175,000脳1+14%-50=$249.92

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