Answered: what is the PV of such a deal? What is…

what is the PV of such a deal? What is the PV if the payments covers only the years from 2000 to 2050 inclusive? What can you conclude for the comparison

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

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Question

Assume it is now January 1, 2000, and someone offers the following deal: starting from year 2000, you will be paid each year the amount of dollars equal to the year, i.e., $2000, $2001, $2002, .... until year 3000 inclusive. If payments occur at the year end and the interest rate remains at 10%, what is the PV of such a deal? What is the PV if the payments covers only the years from 2000 to 2050 inclusive? What can you conclude for the comparison

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