Use Excel

1. You decide to buy a Van Cleef & Arpels platinum necklace with a diamond snow flake pendant for $71,000. You will be getting a $100,000 settlement from a law suit in three years. If interest rates are 4%, and you sell the settlement now, will you have enough to buy the necklace? Justify your answer.

2. You tell the person selling the necklace that youll buy the necklace now if you can pay him $15,000 next year, $20,000 in two years, and $25,000 in three years. Using a 4.5% interest rate, should the owner accept your offer? Justify your answer.

3. You just found out that you have a trust fund. It will pay you $5,000 a quarter for the next 10 years. If interest rates are about 4%, what is this worth to you now?