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Find the value of the stream of cash flows

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Reference no: EM132828413

Your goal is to save $75,000 at the end of 8 years. Today, you deposit $10,000. You make an additional 5 yearly deposits of $10,000. What must the interest rate be?

You will receive $500 tomorrow. You will receive an additional nine cash flows growing at the rate of inflation of 2 percent per year. The nominal interest rate is 10 percent.

a. Find the value of the stream of cash flows.

b. What is the real value of each cash flow received?

c. Find the value of the stream of cash flows, based on real values.

d. What do you observe? Explain.

Reference no: EM132828413

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