King Rat (gkr) wrote,
King Rat
gkr

Eco 200: present value

(individual) What is the present value of each of the following when discounted at interest rates of 4 and 15 percent?

  1. A $10,000 prize in a limerick-writing contest, to be received one year from now.
  2. A $10,000 cash legacy from your Aunt Mehitabel, to be received when you reach your 25th birthday. (If you have already passed it, choose some other birthday).
  3. $10,000 per year for each of the next ten years, beginning one year from now, as first prize for telling in 25 words or less why you like a detergent.
  4. Ownership of an office building from which you expect to receive an annual net income of $10,000 per year for each of the next 30 years, at the end of which time you expect to sell the building and land for $100,000. Assume the annual income amounts are all received at the end of each year.
4%15%
a$9,615.38$8,695.65
b
40th birthday
5 years
$8,219.27$4,971.77
c$81,108.96$50,187.69
d$203,752.20$67,170.10
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