Solution: What is the present value of the inheritance as of the boy’s 6th birthday?

(Last Updated On: December 8, 2017)

What is the present value of the inheritance as of the boy’s 6th birthday?

Problem Statement: EE Board June 1990

On his 6th birthday a boy is left an inheritance. The inheritance will be paid in a lump sum of P10,000 on his 21st birthday. What is the present value of the inheritance as of the boy’s 6th birthday, if the interest is compounded annually? Assume i = 4%

  • A. P6,500
  • B. P8,600
  • C. P5,500
  • D. P7,500

Problem Answer:

The present value of the inheritance as of the boy’s 6th birthday is P5,500.

Solution:

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Solution: What is the present value of the inheritance as of the boy’s 6th birthday?
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