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YOUR AUNT HAD AGREED TO GIVE YOU A GIFT. She is going to give you a choice in how you may collect…

YOUR AUNT HAD AGREED TO GIVE YOU A GIFT. She is going
to give you a choice in how you may collect your gift. You may take
$10,000 payable at the end of each year for 10 years ( for a gift
sum of 100,000). Alternatively you may select an option provides
you with your gift right in cash. If you accept a 6% rate of return
as an appropriate rate of return, how much will you receive today
if you take the cash rather than the annual payments?

Congratulations, you have just graduated and accepted
an offer from well known corporation – make a lot a mony inc. You
also have a new daughter. You would like to save some money from
your new big salary in order to have 50,000 for your daughter to
use for college in 18 yrs. If you can earn 9% on your money, how
much do you have to put away ?

You are the new manager of a new department at a
major bank. As part of your job, you must estimate the rate of
inflation to be included in your banks estimates of rates to charge
on loans. If your current estimate of inflation is 3.1% per month,
what is your estimate of the compound annual rate of
inflation.

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