(individual) What is the present value of each of the following when discounted at interest rates of 4 and 15 percent?
- A $10,000 prize in a limerick-writing contest, to be received one year from now.
- 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).
- $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.
- 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 |