Illustrate one half the present value when discounted

Reference no: EM1329967

Calculating the present value of an annuity

In a widely publicized case in California, the ex-wife of a doctor sued to obtain half the value of his medical degree, on the grounds that she had helped put him through medical school and was entitled to half of everything they owned under California's community property law.

The wife's attorney asked for $250,000 as her share of the value of her ex-husband's medical training. Suppose the medical degree could be conservatively expected to add $30,000 per year for 30 years to what the doctor would have earned without the degree. Because this amount will presumably rise with any inflation that occurs over the period, a real, rather than nominal interest rate should be used to calculate its present value.

Would you support the ex-wife's attorneys in their estimate of what she was entitled to? Yes

What is one-half the present value of a $30,000 annuity for 30 years when discounted at 4 percent?

Reference no: EM1329967

Questions Cloud

Comparing lump sum payment : Upon retirement, you're offered a choice between $250,000 lump sum payment or lifetime annuity of $51,200. If you expect to live for 15 years after retirement

Explain how do these tools influence the money supply : Explain how do these tools influence the money supply, and in turn, affect macroeconomic factors.

Explain country analysis of mexico : Explain Country Analysis of Mexico and Can provide or write a country analysis illustrating the following areas of doing business in Mexico

Determinig annual installments : What if you make the first payment on loan immediately instead of at the end of first year?

Illustrate one half the present value when discounted : Illustrate one half the present value of a $30,000 annuity for 30 years when discounted at 4 percent.

Funding the retirement : How large fund will you need when you retire in 20 years to give the 30-year, $20,000 retirement annuity? What effect would increase in the rate you can earn both throughout and prior to retirement have on the values found in parts a and b? Discuss..

Explain how does banks use covered interest arbitrage : Exp[lain how does banks use Covered interest arbitrage to protect themselves.

Data analysis on a specific organization : Data analysis and all other resources are linked to this case and you want to research and prepare a report that summarizes the following questions relevant to data analysis on a specific organization of your choice.

Explain e-business and supply chain automation : Explain E-Business and Supply Chain Automation and how can Internet-based technologies be used to automate the supply chain

User Account

All Pages