What is the present value of a lottery win that pays $100,000 every year for the next 22 years, assuming an annual return of 6%?
A bond pays you annually $600 forever. Assuming 6% annual interest rate, find the present value of the bond. Assume that the first payment comes in a year from today.
You want to start an endowment today that will pay for a finance lab at MSUB from next year. While next year the required amount for such a finance lab is $20,000, the amount will rise every year by 2% due to inflation. If the endowment is expected to make 6% annually, find out how much the endowment fund should be if you want to start it today. This is a growing perpetual cash flow problem.