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Finding Present value of investment option.

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1. Your aunt offers you a choice of $20,000 in 50 years or $45 today. If money is discounted at 13 percent, which should you choose?

2. How much would you have to invest today to receive?

  1. $12,000 in 6 years at 12 percent?
  2. $15,000 in 15 years at 8 percent?
  3. $5,000 each year for 10 years at 8 percent?
  4. $40,000 each year for 40 years at 5 percent?

3. Bruce Sutter invests $2,000 in a mint condition Nolan Ryan baseball card. He expects the card to increase in value by 20 percent a year for the next five years. After that, he anticipates a 15 percent annual increase for the next three years. What is the projected value of the card after eight years?

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