What is the equivalent value of these gifts at present time

Assignment Help Financial Management

Reference no: EM131063929

Your rich aunt is going to give you an end of year gift of $1,100 for each for the next 10 years. (a) If general price inflations is expected to average 7% per year during the next 10 years, what is the equivalent value of these gifts at the present time? The real interest rate in 4% per Year. (b) Suppose that your aunt specified that the amount gifts of $1,100 are to be increased by 7% each year to keep pace with inflation. With a rea interest rate of 4% per year, what is the current PW of the gifts?

Reference no: EM131063929

Questions Cloud

Customized asian floating strike put option : Problem 2. A customized Asian floating strike Put option in a 2-period binomial tree pays out where Si is the stock price at the end of the i-th period. If So = 40, r = 0.045, o = 0.15, 6 = 0 and each period is 2 months long, find the no-arbitrage pr..

At what discount rate is the npv just equal to zero : An investment has an installed cost of $54972. The cash flows over the four-year life of the investment are projected to be $18202, $20327, $18949, and $13403. At what discount rate is the NPV just equal to zero?

What annual interest rate does the bank offer : Money deposited in a certain bank doubles every 20 years. The bank compounds interest continuously. What annual interest rate does the bank offer?

Why did the boys confess to crimes they did not commit : While in police custody, why did the boys confess to crimes they did not commit? How were they misled by their interrogators? Why did the presence of family and the recitation of Miranda warnings fail to protect them?

What is the equivalent value of these gifts at present time : Your rich aunt is going to give you an end of year gift of $1,100 for each for the next 10 years. (a) If general price inflations is expected to average 7% per year during the next 10 years, what is the equivalent value of these gifts at the present ..

Brand personality consistent : Consumers often choose and use brands that have a brand personality consistent with their own actual self-concept, ideal self-concept, or others self-concept.

Determine the benefit-cost ratio for the proposed facility : The Townsville City Council is considering a proposal by the mayor to construct a recreational facility at a cost of $1.0 million. The facility is expected to have a useful life of 30 years during which operating costs are expected to average $100,00..

What was the average real risk premium : You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 18 percent, –14 percent, 20 percent, 22 percent, and 10 percent. Suppose the average inflation rate over this period was 3.1 percent and the average T-bi..

Evaluate the key points of the articles in your own words : 3. Evaluate the key elements of the risks to counselor and client safety associated with the types of crises you may work with in your community. Key elements of risk are discussed throughout crisis assessment in your textbook, such as assess..

User Account

All Pages