Question

you are a trust fund baby, but you cannot touch your money until you are 30. you are now 21 and want to plan for your future based on the current value of your trust fund. The guaranteed payout of your trust is $25,000. what is that money worth to you today if you assume an annual inflation rate of 3% compounded annually

Answer 1

Step-by-step explanation:

30 - 21 = 9 years

r = 3% inflation

FV = 25,000

We know that FV = PV(1+r)^n

25,000 = PV(1+0.03)^9

PV = 25,000/ 1.3047731

PV = 19,160.42, this is how much it worth today