Solved

Accounting help

Posted on 2014-02-04
14
262 Views
Last Modified: 2014-02-04
Can someone help me out with this question:

15 years from now, you will be inheriting $75,000. What is this inheritance worth to you today if you can earn 5 percent interest compounded annually?


a. $36,017.22
b. $36,076.28
c. $36,190.98
d. $36,259.88
e. $36,346.15
0
Comment
Question by:mani_sai
  • 7
  • 4
  • 2
  • +1
14 Comments
 
LVL 90

Expert Comment

by:John Hurst
ID: 39832615
This is a homework question and so we cannot answer, just help.

The problem is a compound interest problem and a nice simple one at that. Your compounding period is 15 years and the rate is fixed at 5% per year.

From there, the correct answer does appear on the list above.

.... Thinkpads_User
0
 
LVL 8

Author Comment

by:mani_sai
ID: 39832669
what is the formula used ?
0
 
LVL 27

Accepted Solution

by:
d-glitch earned 500 total points
ID: 39832700
If you have  X dollars today,  you will have  X*(1.05) dollars in one year.

You will have  x*(1.05)²  dollars in two years.

. . . .
0
 
LVL 90

Expert Comment

by:John Hurst
ID: 39832755
To give you the formula is to give you the solution. Look in your text for a compound interest formula. Compound a rate for a number of years and you should be able to solve this. We cannot do your schoolwork for you.

... Thinkpads_ User
0
 
LVL 8

Author Comment

by:mani_sai
ID: 39832763
I figured.
0
 
LVL 8

Author Closing Comment

by:mani_sai
ID: 39832767
d-glitch: - Thanks for your help.
0
 
LVL 90

Expert Comment

by:John Hurst
ID: 39832788
To give away homework solutions is not allowed and you the asker here learned nothing. That's bad for you.
0
Enabling OSINT in Activity Based Intelligence

Activity based intelligence (ABI) requires access to all available sources of data. Recorded Future allows analysts to observe structured data on the open, deep, and dark web.

 
LVL 8

Author Comment

by:mani_sai
ID: 39832800
I know what is good or bad to me.  you are not person to decide.
0
 
LVL 90

Expert Comment

by:John Hurst
ID: 39832835
I teach people lots of things. I do know what trivial homework looks like. I repeat:  you didn't learn how to do your own work.

... Thinkpads_User
0
 
LVL 8

Author Comment

by:mani_sai
ID: 39832847
Don't under estimate people here....

here is my solution:

Formula:    PV    =  FV  
FV = 75000
I = interest = 0.05
N = no of years = 15

75000  
75000(1/(1+ 0.05) ^ 15) =   36076.28
0
 
LVL 8

Author Comment

by:mani_sai
ID: 39832928
Thinkpads_User :

I am sorry, I understand I should not post this type of questions.

I respect your help and tech other people in this forum.
0
 
LVL 27

Expert Comment

by:d-glitch
ID: 39833010
Actually, I believe this question (and any other question you don't know how to solve) is acceptable in this forum.

And I believe the sort of help I provided (a hint not the answer or the relevant formula) is well within the ExEx guidelines.

I would always recommend thinking about the math rather than looking up a formula.
0
 
LVL 27

Expert Comment

by:aburr
ID: 39833127
Another way to look at the problem (and which might lead you to the solution) is to consider the actual situation.
You are going to get some money in the future but you need it now. so you sell your inheritance.
The buyer needs to know how much to pay you. He thinks he can get 5% compounded yearly. How much should he charge. He should charge a sum which will return 75000 in 15 years. From there use the info already provided here.
0
 
LVL 8

Author Comment

by:mani_sai
ID: 39833135
Thanks Guys.
0

Featured Post

Highfive + Dolby Voice = No More Audio Complaints!

Poor audio quality is one of the top reasons people don’t use video conferencing. Get the crispest, clearest audio powered by Dolby Voice in every meeting. Highfive and Dolby Voice deliver the best video conferencing and audio experience for every meeting and every room.

Join & Write a Comment

Lithium-ion batteries area cornerstone of today's portable electronic devices, and even though they are relied upon heavily, their chemistry and origin are not of common knowledge. This article is about a device on which every smartphone, laptop, an…
EE introduced a new rating method known as Level, which displays in your avatar as LVL. The new Level is a numeric ranking that is based on your Points. This article discusses the rationale behind the new method and provides the mathematical formula…
Notifications on Experts Exchange help you keep track of your activity and updates in one place. Watch this video to learn how to use them on the site to quickly access the content that matters to you.
Articles on a wide range of technology and professional topics are available on Experts Exchange. These resources are written by members, for members, and can be written about any topic you feel passionate about. Learn how to best write an article t…

743 members asked questions and received personalized solutions in the past 7 days.

Join the community of 500,000 technology professionals and ask your questions.

Join & Ask a Question

Need Help in Real-Time?

Connect with top rated Experts

11 Experts available now in Live!

Get 1:1 Help Now