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Larry Mattingly turned 20 years old today. His grandfather had established a trust fund that will pay him $84,000 on his next birthday. However, Larry needs money today to start his college education, and his father is willing to help. Mr. Mattingly has agreed to give Larry the present value of the $84,000 future cash inflow, assuming a 10 percent rate of return. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Determine the amount of cash that Larry Mattingly's father should give him.

Respuesta :

Shahzaibfaraz

Answer:

Present Value = $76363.636363  rounded off to $76363.64

Explanation:

The present value can be calculated using the following formula,

Present Value = Future Value / (1+r)^t

Where,

  • r is the rate of return
  • t is the time period

Present Value = 84000 * (1+0.10)^1

Present Value = $76363.636363  rounded off to $76363.64

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