2 your uncle died last year and left you money in his, Ask an Expert

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2. Your uncle died last year and left you money in his will. You are to receive $150,000 next year (in time 1) and $200,000 fifteen years from today (i.e., in time 15).

(a) What is the value of the inheritance today (in time 0) if the appropriate discount rate is 5% and you compound annually?

(b) If you invest the money when you receive it, how much will it grow to 40 years from today (i.e., in time 40) if you earn 5% each year?

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