Present value table to determine the amount of cash

Reference no: EM13148295

Kade Gulliver turned 20 today. His grandfather established a trust fund that will pay Mr Gulliver $60,000 on his next birthday. However, Mr. Gulliver needs money for college today. His father is willing to help and has agreed to give Mr. Gulliver the present value of the cash inflows, assuming a 10% rate of return.

a. Use a present value table to determine the amount of cash that Mr. Gulliver's father should give him.

b. Use an algebraic formula to prove that the present value of the trust fund (the amount of cash computed in portion "a") is equal to its $60,000 future value.

Reference no: EM13148295

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