What Is the Current Economic Value of an Inheritance That

question 162

Short Answer

What is the current economic value of an inheritance that will pay $2,000 to the beneficiary at the beginning of every three months for 20 years, starting when the beneficiary reaches 20 years of age, 4½ years from now? Assume that money is worth 6% compounded monthly. (Round to the nearest dollar.)

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Definitions:

Z-score

A statistical measure representing the number of standard deviations a data point is from the mean of its distribution.

Symmetrical Area

An area in a statistical distribution where two portions on either side of the center are mirror images of each other.

Discrete Probability Distributions

Probability distributions that deal with discrete random variables, quantifying the probabilities of different outcomes.

Continuous Probability Density Functions

Mathematical functions that describe the likelihood of all possible values of a continuous random variable.