Determine the present worth of the given series of cash flow

Reference no: EM131506410

Question: 1. Gold has recently hit record high prices. When adjusted for inflation, gold remains below a 1980 peak price of $850 per troy ounce. Suppose this 1980 price equates to $2,400 per ounce in 2014 dollars. Based on the prices of gold in 1980 and 2014, what was the compounded annual rate of inflation over this time interval?

2. Determine the present worth (at time 0) of the following series of cash flows using a geometric gradient. The real interest rate is 5% per year.

EOY 3 4 5 6 ...25
Cash Flow $1,000 $1,100 $1,210 $1,331 ...$8,140

Reference no: EM131506410

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