Question: Dan and Jia are newlyweds and have just purchased a condominium for $70,000. Since the condo is very small, they hope to move into a single-family house in 5 years. How much will their condo be worth in 5 years if inflation is expected to be 8 percent per year?
Then, Calculate the value today at t = 0 of a $25,000 perpetuity at a 14 percent discount rate.