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8. The yearly interest rate is 5%. What is the present value today of payments of $1 one year from today, $2 two years from
8. The yearly interest rate is 5%. What is the present value today of payments of $1 one year from today, $2 two years from today, $3 three years from today, and so on, forever? Each year's payment is $1 more than the previous year's payment. (Hint: You must use the time travel of money rules to simplify this to get something that you can manage. Think of this as an annuity with level payments of $1, beginning one year from today, plus an annuity with level payments of $1 beginning two years from today, etc. You will need to be careful as you replace each expression with something that is easier to manage. Refer to the pictures of perpetuity timelines.)
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