Q3: You may have already won $2 millions. You will receive $100,000 per year for 20 years. Suppose you are considering the following two options: First Choice: You save your winning for the first 7 years and then spend every cent of the winning in the remaining 13 years Second Choice: You do the reverse, spending for 7 years and then saving for 13 years If you can save wining at 7% interest, how much would you have at the end of 20 years and what interest rate on your saving will make the two options equivalent ?
Q3: You may have already won $2 millions. You will receive $100,000 per year for 20 years. Suppose you are considering the following two options: First Choice: You save your winning for the first 7 years and then spend every cent of the winning in the remaining 13 years Second Choice: You do the reverse, spending for 7 years and then saving for 13 years If you can save wining at 7% interest, how much would you have at the end of 20 years and what interest rate on your saving will make the two options equivalent ?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: The Basic Tools Of Finance
Section9.1: Present Value: Measuring The Time Value Of Money
Problem 1QQ
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