rate is 0 during the entire time period, how much is the above income stream worth right now? Please show your work and explain your reasoning.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 15PROB
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6.

 

Suppose there will be a payment of $
100,000 every year, for two years, starting
next year. If the annual interest rate is 1%
this year, 2% from next year on and inflation
rate is O during the entire time period, how
much is the above income stream worth
right now? Please show your work and
explain your reasoning.
a. $197,039.5
b. $195,126.8
c. $194,156.0
d. $ 196,078.4
Transcribed Image Text:Suppose there will be a payment of $ 100,000 every year, for two years, starting next year. If the annual interest rate is 1% this year, 2% from next year on and inflation rate is O during the entire time period, how much is the above income stream worth right now? Please show your work and explain your reasoning. a. $197,039.5 b. $195,126.8 c. $194,156.0 d. $ 196,078.4
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