You are the beneficiary of a trust fund that will start paying you cash flows in five years. The cash flows will be $25,000 per year and will continue for 40 years. If the interest rate is 4% per year, what is the value needed in the trust fund now to fund these cash flows?
You are the beneficiary of a trust fund that will start paying you cash flows in five years. The cash flows will be $25,000 per year and will continue for 40 years. If the interest rate is 4% per year, what is the value needed in the trust fund now to fund these cash flows?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 23P
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![You are the beneficiary of a trust fund that will start paying you cash flows in five
years. The cash flows will be $25,000 per year and will continue for 40 years. If the
interest rate is 4% per year, what is the value needed in the trust fund now to fund
these cash flows?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff0a8a8b2-22c4-42fd-96b3-e86c4fe33385%2F8f5bb1a3-13c2-4b14-8ef8-7bb6f177c1a6%2Fukvd03_processed.png&w=3840&q=75)
Transcribed Image Text:You are the beneficiary of a trust fund that will start paying you cash flows in five
years. The cash flows will be $25,000 per year and will continue for 40 years. If the
interest rate is 4% per year, what is the value needed in the trust fund now to fund
these cash flows?
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