a) How much would you pay someone today to get $10,000 each year for the next 20 years? You can get an 8% return on your investment.
b) If you invest $2,500 each year from now until you retire (for 35 years) how much will you have in 35years? Your return will be 7%.
c) Which would you rather have: $4000 today or $500 each year for the next 10 years? Your opportunity cost of capital is 9%.
Please show formulas.