As the winner of a tandoori chicken eating competition you will receive $10,000 today but this amount will then decline at a constant rate of 2% p.a. over the foreseeable future. If the interest rate appropriate for valuing the prize is 14% p.a. its present value today is closest to: O $95,000. O $61,250. O $72,500. O $71,250.

As the winner of a tandoori chicken eating competition you will receive $10,000 today but this amount will then decline at a constant rate of 2% p.a. over the foreseeable future. If the interest rate appropriate for valuing the prize is 14% p.a. its present value today is closest to: O $95,000. O $61,250. O $72,500. O $71,250.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You won a raffle while you were down the shore with friends. For your prize, you can choose among the following three alternatives. If you believe that an 8% return is the appropriate discount rate to use, what is the present value of $25,000 four years from today?
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Show work please. Thank you
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