Explain the fisher effect

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1. Your company will generate $76,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.75 percent, what is the present value of the savings?

2. Explain the Fisher effect. Why would the Fisher effect relate to how forward rate prices are constructed?

3. The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $24,000 per year forever. Suppose a sales associate told you the policy costs $469,000. At what interest rate would this be a fair deal?

Reference no: EM131818480

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