Accounting help

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
LVL 8
mani_saiAsked:
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d-glitchConnect With a Mentor Commented:
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.

. . . .
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John HurstBusiness Consultant (Owner)Commented:
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
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mani_saiAuthor Commented:
what is the formula used ?
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John HurstBusiness Consultant (Owner)Commented:
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
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mani_saiAuthor Commented:
I figured.
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mani_saiAuthor Commented:
d-glitch: - Thanks for your help.
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John HurstBusiness Consultant (Owner)Commented:
To give away homework solutions is not allowed and you the asker here learned nothing. That's bad for you.
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mani_saiAuthor Commented:
I know what is good or bad to me.  you are not person to decide.
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John HurstBusiness Consultant (Owner)Commented:
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
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mani_saiAuthor Commented:
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
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mani_saiAuthor Commented:
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.
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d-glitchCommented:
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.
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aburrCommented:
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.
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mani_saiAuthor Commented:
Thanks Guys.
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