Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today

the present value of cash inflows is $38,608.50

Explanation:

The computation of the amount that should be invested today is shown below:

The present value of cash inflows is

= Yield at the end of each of the next ten years  × Present value of annuity factor(5%,10)

= $5,000 × 7.7217  

= $38,608.50

hence, the present value of cash inflows is $38,608.50

We simply applied the above formula and the same is to be considered