Your rich aunt is going to give you anend-of-year gift of $1,000 for each of the next 10 years.

a. If general price inflation is expected to average 7% per year during the next 10years, what is the equivalent value of these gifts at the presenttime? The real interest rate is 3% per year.

b. Suppose that your aunt specified that the annual gifts of $1,000 are to be increased by 7% each year to keep pace with inflation. With a real interest rate of 3% per year, what is the current PW of thegifts?

a. The PW of the gifts is ? (Round to the nearestdollar.)

b. The PW of the gifts is ? (Round to the nearestdollar.)

Your rich aunt is going to give you an end-of-year gift of $1,000 for each of the next 10 years. a. If general price inflation is expected to average 7% per year during the next 10 years, what is the equivalent value of these gifts at the present time? The real interest rate is 3% per year. b. Suppose that your aunt specified that the annual gifts of $1,000 are to be increased by 7% each year to keep pace with inflation. With a real interest rate of 3% per year, what is the current PW of the gifts? Click the icon to view the interest and annuity table for discrete compounding when /= 3% per year. a. The PW of the gifts is $ . (Round to the nearest dollar.) b. The PW of the gifts is $ . (Round to the nearest dollar.)More Info X Discrete Compounding; i = 3% Single Payment Uniform Series Compound Compound Sinking Capital Amount Present Amount Present Fund Recovery Factor Worth Factor Factor Worth Factor Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given P Given F Given A Given A Given F Given P 2 F/P P/F F/A P/A A/F A/P 1.0300 0.9709 1.0000 0.9709 1.0000 1.0300 1.0609 0.9426 2.0300 1.9135 0.4926 0.5226 1.0927 0.9151 3.0909 2.8286 0.3235 0.3535 1.1255 0.8885 4.1836 3.7171 0.2390 0.2690 1.1593 0.8626 5.3091 4.5797 0.1884 0.2184 1.1941 0.8375 6.4684 5.4172 0. 1546 0.1846 1.2299 0.8131 7.6625 6.2303 0.1305 0.1605 1.2668 0.7894 8.8923 7.0197 0.1125 0.1425 1.3048 0.7664 10.1591 7.7861 0.0984 0.1284 10 1.3439 0.7441 11.4639 8.5302 0.0872 0.1172 11 1.3842 0.7224 12.8078 9.2526 0.0781 0. 1081 12 1.4258 0.7014 14.1920 9.9540 0.0705 0.1005 13 1.4685 0.6810 15.6178 10.6350 0.0640 0.0940 14 1.5126 0.6611 17.0863 11.2961 0.0585 0.0885 15 1.5580 0.6419 18.5989 11.9379 0.0538 0.0838 16 1.6047 0.6232 20.1569 12.5611 0.0496 0.0796 17 1.6528 0.6050 21.7616 13.1661 0.0460 0.0760 18 1.7024 0.5874 23.4144 13.7535 0.0427 0.0727 19 1.7535 0.5703 25.1169 14.3238 0.0398 0.0698 20 1.8061 0.5537 26.8704 14.8775 0.0372 0.0672 Print Done