Question

Two years from now, your mother will receive the first of three annual payments of $20,000 from a small business project. If she can earn 9 percent annually on her investments and plans to retire six years after the last payment, how much will the three business project payments be worth at the time of her retirement?

Answer 1

Answer:

i think FV(10) is 110,000.

Explanation:

Suppose today is 1/1/2000, two years from now, ur mom will get the first payment in 2002, and then the second is 2003, and the last is in 2004. U can calculate those number to bring it back to 2000, so u can calculate PV= 46,446 .Then, from 2004, ur mom plans to retire six years later from 2004, which means,2010 (she will begin retire in 2010, last day of 2009, 31/12/2009). Then u will calculate the FV= PV.(1+9%)^10= 110,000