Question 1: (50 points) Assume the following: An average movie ticket costs $12.13 today (Suppose today is 5/1/2020). The effective monthly nominal interest rate is 0.5%. If I save in a bank, this is the nominal interest rate I am going to earn. CPI rises by about 3% every year in the U.S. This is the pace at which the price of a movie ticket rises. Perpetuities of money and movie tickets are valuable to you because others can inherit them from you. Expand your cell to show 4 decimal places (e.g., $12.4567). a. (10 points) Taking inflation into account, what is the expected nominal price of a movie ticket in 5/1/2030? b. (10 points) How much do I have to save in the bank today, so that my bank account in 5/1/2030 is exactly enough to offer 10 tickets? C. (15 points) The movie theatre offers you a super ticket, which allows you to get a movie ticket every May 1st starting from today (5/1/2020) until 2030. So you will receive 11 tickets in total. What is the fair value of this super ticket today? d. (15 points) The movie theatre also offers you a saving plan, which gives you $20 every May 1st starting from today (5/1/2020) until 2030. So you will receive 11 payments in total. What is the fair value of this saving plan today? on 5/1/2020 Movie Ticket Today Monthly nominal interest rate Expected annual inflation rate $12.13 0.5000% 3.0000% Ticket price in 5/1/2030 $16.3017 Saving today needed to buy 10 tickets in the future Price today of the super ticket Price today of the saving plan