QUESTION 7 10 points Save Answer In the movie Father of the Bride (1991), Steve Martin's daughter gets married in a wedding that costs $249,323 (!!). But this is WAY crazier when you realize that those are "1991 dollars", NOT accounting for inflation If the CPI was 134.95 in 1991 and 251.92 in 2021, what is the inflation-adjusted value of the wedding in "2021 dollars"? Round your answer to two (2) decimal places QUESTION 8 10 points Save Answer Suppose that you buy a bond that pays $93.95 in coupon payments for 19 months with a maturity bonus of $711.36. How much money will this bond pay out over its lifetime? Round your answer to two (2) decimal placesQUESTION 9 10 points Save Answer You have just become the president of a company deciding whether to build a new factory (congrats!). The factory is expected to cost $538 million to build, and will yield benefits of $949 million in 11 years. The current annual interest rate is i=7%. What is the Present Value of the factory's benefits in millions of dollars? So if your answer is "35.56 million dollars", you should type in "35.56", NOT "35,650,000" Round your answer to two (2). decimal placesThe Consumer Price Index (CPI) . Mathematically, we calculate the CPI as follows cost of bundle this year CPI = * 100 cost of bundle in base year . Inflation (t) is then the percentage change in the CPI CPI2 - CPI1 Inflation (1) = CPI1The Consumer Price Index (CPI) 2017 (base year) 2018 2019 P Q P Q P Q Pizza $2 50 $2.50 50 $3 50 Soap $1 6 $1 6 $1.5 6 Rent $525 $550 1 $550 . Notice that Q doesn't change from year to year (fixed bundle) . What is the CPI in 2019, using 2017 as a base year? $3 * 50 + $1.50 *6 + $550 * 1 $709 CPI = * 100 = 112.36 $2 * 50 + $1 *6 + $525 * 1 $631Comparing costs across time . In 1949, the CPI was 23.8 ; and in 2020 it was 258.8 . So we can calculate the inflation-adjusted value like this ... CPI20 258.8 Oreos20 = x = Oreos49 * = $0.14 * ~$1.52 CPI49 23.8 OREO OREO Oreos49 = $0.14 Oreos20 = $x 1949 2020 CP149=23.8 CP120=258.8The Financial System . The Real interest rate (R) can be found Nominal Real comes and money money with Fisher's Equation (on the right) from inflation growth growth . When inflation is small, we can use (1 + i) = (1+R) * (1+) Fisher's approximation: R ~ i - It = (1+i) =1+n+R+(R *n) . To get the real interest rate, just subtract Fin+R out the inflation rate!Future Value - S100 right now gives you $103, while $1 per day gives you $100 001 $100 * (1 +3%) = $103 - Money today is worth more than money in the future