q1-You win a lottery with a prize of $1.5 million. Unfortunately the prize is paid in 10 annual installments. The first payment is next year. How much is the prize really worth? The discount rate is 8 percent. q2-Harold Filbert is 30 years of age and his salary next year will be $20,000. Harold forecasts that his salary will increase at steady rate of 5 percent per annum until his retirement at age 60. If the interest rate is 8percent, what is the PV of his last salary payment? do not use excel

q1-You win a lottery with a prize of $1.5 million. Unfortunately the prize is paid in 10 annual installments. The first payment is next year. How much is the prize really worth? The discount rate is 8 percent. q2-Harold Filbert is 30 years of age and his salary next year will be $20,000. Harold forecasts that his salary will increase at steady rate of 5 percent per annum until his retirement at age 60. If the interest rate is 8percent, what is the PV of his last salary payment? do not use excel

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 20PROB

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