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Eight years from now, you will be inheriting $100,000. what is this inheritance worth to you today if you can earn 7.25 percent interest, compounded annually?

Answer :

Let the present worth = P

P(1+0.075)^8 = 1,00,000
⇒ 1.783478 P = 100000
⇒ P = 100000/1.783478
⇒ P = $56,070

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