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kaheart [24]
3 years ago
5

Alicaandgeraldolinepeliadreferecrerd

SAT
1 answer:
sdas [7]3 years ago
4 0
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James bennett also allocates wealth between youth and old age. He has no cash currently (in his youth), but will inherit $3000 i
Anvisha [2.4K]

The present value (PV) of $15,254.24 is the most James bennett can consume in his youth.

<u>Given the following data:</u>

  • Inheritance = $3000
  • Interest rate = 18%
  • Investment opportunity (youth) = $12,000
  • Investment opportunity (old age) = $15,000

To calculate the most James bennett can consume in his youth:

First of all, we would determine the future value of James bennett from his investment and inheritance as follows:

FV = 15000 + 3000

FV = $18000

Mathematically, the most James bennett can consume in his youth is given by this formula:

PV = \frac{FV}{(1+i)^n}

Substituting the given parameters into the formula, we have;

PV = \frac{18000}{(1+0.18)^1}\\\\PV = \frac{18000}{1.18}

PV = $15,254.24

Therefore, the present value (PV) of $15,254.24 is the most James bennett can consume in his youth.

Read more on present value here: brainly.com/question/24341207

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