QUESTION 42

1. Aunt Clara has promised to leave you $200 a year starting next year and have it increase at 6% a year thereafter. The payments are expected to go on indefinitely. How much has Aunt Clara left you if your opportunity cost is 10 percent?

$2,500

$3,000

$4,000

$5,000

$6,000

1 points

QUESTION 43

1. In the above question, what is the present value of the cash flows if the first payment will be made in five years?

$2,667

$3,023

$3,415

$4,212

$4,734