PART ONE

If the real rate of interest is 1.75% and if the expected inflation rate is 8.65%, what is the present value of $50,000 to be received exactly 8 years from today?

PART TWO

Over Dinas objections, Ellie is evaluating an investment that will provide the following end-of-year cash flows: Year Cash Flow 1 $11,500 2 $15,000 3 $18,000 4 $22,500 5 $27,000 6 $0 7 $35,000 If Ellie believes that she should earn an annual rate of 14.9 percent on this investment, how much should Ellie pay for this investment?

PART THREE

Suppose Link deposits $135,000 into an account earning 7.285 percent interest, compounded monthly. How many years (rounded to one decimal place for example, 32.1843 year = 32.2) will it take for Link s account to be worth $50,000?

PLEASE SHOE WORK !