Question

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

Answer 1

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