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Your grandfather left an inheritance for you of $80,000. However you can only drawdown on the...

Your grandfather left an inheritance for you of $80,000. However you can only drawdown on the investment as follows: Years 1 – 4 $10,000 each year and Year 5 $40,000 Interest on the fund is 7.5%. What is the present worth of this inheritance?

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Answer #1
Year Withdrawal Discounting factor Discounted CF
1 $ 10,000.00         1.00000 $       10,000.00
2 $ 10,000.00         0.93023 $         9,302.33
3 $ 10,000.00         0.86533 $         8,653.33
4 $ 10,000.00         0.80496 $         8,049.61
5 $ 40,000.00         0.74880 $       29,952.02
Present worth = $ 65,957.28
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