A father left a will of 16400 for his two sons aged 17 and 18 yrs. they must get equal amounts when they are 20 yrs at5% compound interest.find the present share of the younger son
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The two are supposed to receive equal share hence the younger son should receive :
16400/2 = 8200
Present value factor is :
(1 + i)⁻ⁿ
n = 3
i = 5%
(1.05)⁻³ = 0.86384
Present value :
0.86384 × 8200 = 7083.49
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