Your aunt dies and leaves you $1M in her will,but it must stay in trust for 10 years.You want to spend it now,so you go to the Bank to borrow against the bequest.You offer the $1M to repay interest and principal at the end of ten years.The Bank wants to earn 5% on its loan,so how much will it offer you today?
A) $613,913.25
B) $617,283.95
C) $675,564.17
D) $558,394.78
E) $1,000,000.00

Question

Quizplus · Accepted Answer

PV = 11ea7fdb_fc2c_a155_a768_2b8a9ed07789_TB2902_00 PV = 11ea7fdb_fc2c_a156_a768_b944c99cbff8_TB2902_00 = $613,913.25
Using a financial calculator:
N = 10, I/Y = 5, PMT = 0, FV = -1,000,000, cpt PV = $613,913.25

Your Aunt Dies and Leaves You $1M in Her Will,but