Suppose a wealthy university booster has pledged a superstar high-school sophomore hockey recruit $1,000 as a gift the day they give a verbal commitment to play hockey at the booster's alma mater. Assuming a constant interest rate of 11%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year (Dollars) 1,000.00 Value in Two Years (Dollars) 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. The present value of the gift is if the recruit commits in two years than it is if you get engaged in one year.

Suppose a wealthy university booster has pledged a superstar high-school sophomore hockey recruit $1,000 as a gift the day they give a verbal commitment to play hockey at the booster's alma mater. Assuming a constant interest rate of 11%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year (Dollars) 1,000.00 Value in Two Years (Dollars) 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. The present value of the gift is if the recruit commits in two years than it is if you get engaged in one year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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