Adam Wilton turned 20 years old today. His grandfather had established a trust f

Question

Adam Wilton turned 20 years old today. His grandfather had established a trust fund that will pay him $85,000 on his next birthday. However, Adam needs money today to start his college education, and his father is willing to help. Mr. Witlon has agreed to give Adam the present value of the $85,000 future cash inflow, assuming a 8 percent rate of return. (PV of $1 and PVA of $1) (Use appropriate factor (s) from the tables provided.) Determine the amount of cash that Adam Wilton's father should give him. (Round your final answer to the nearest whole dollar amount.)

Explanation / Answer

The amount of cash that Adam's father should give him

= PV of $85000

= $85000 x PVIF (8%,1)

= $85000 x 0.9259

= $78702

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