Answer : the present value of your inheritance = $ 55,600.36
Working notes for the above answer is as follow
We have provided with the information that ,
receive a $90,000 inheritance in 7 years.
It could invest money today at 7% compounded semi-annually
the present value of your inheritance is calculated as follow
PV = Fv
FV =$90,000
Interest rate is 7 % compounded semi-annually
so i = 7/2 =3.5
we put all these figure in the sum
PV= $ 90,000 ( 1 / (1+0.035)14 )
= $ 90,000 * 0.6177
= 55600.36
| Year | Interest | FV |
| $55,600.36 | ||
| 1 | $3,960.14 | $59,560.50 |
| 2 | $4,242.20 | $63,802.69 |
| 3 | $4,544.35 | $68,347.04 |
| 4 | $4,868.02 | $73,215.06 |
| 5 | $5,214.74 | $78,429.80 |
| 6 | $5,586.16 | $84,015.96 |
| 7 | $5,984.04 | $90,000.00 |
