1. A company has to pay a plaintiff 10 annual payments after a lawsuit. The first payment is $20,000 due today and subsequent payments are inflation adjusted. Under the assumption that the anticipated inflation is 1.5% per year and that the nominal rate of interest is 6% per year, find (a) the real rate of interest, (b) the present value of the obligation of the company, ANS: 4.43%, $165,812.30 Excel Solution Preferred