You have just received an endowment and placed this money in

You have just received an endowment and placed this money ina savings account at an annual rate of 7.14 percent. You are going to withdraw the following cash flows for the next five years. End of year 1. $7,366 2. $5,805 3. $3,156 4. $2,335 5. $5,768 How much is the endowment that you received? Round the answer to two decimal places.

Solution

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

which is equal to

=7366/1.0714+5805/1.0714^2+3156/1.0714^3+2335/1.0714^4+5768/1.0714^5

which is equal to

=$20356.11(Approx)