1. 33. Real cash flows [LO 7.4] When Marilyn Monroe died, her ex-husband Joe DiMaggio vowed to...
Question:
1. 33.
Real cash flows [LO 7.4] When Marilyn Monroe died, her ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star cost about $7. Based on actuarial tables, ‘Joltin’ Joe’ could expect to live for 30 years after the actress died. Assume that the EAR is 6.4 per cent. Also, assume that the price of the flowers will increase at 3.7 per cent per year, when expressed as an EAR. Assuming that each year has exactly 52 weeks, what is the present value of this commitment? Joe began purchasing flowers the week after Marilyn died.
Step by Step Answer:
Fundamentals Of Corporate Finance
ISBN: 9781743768051
8th Edition
Authors: Stephen A. Ross, Rowan Trayler, Charles Koh, Gerhard Hambusch, Kristoffer Glover, Randolph W. Westerfield, Bradford D. Jordan