A young graduate has been offered a time-share on a condo in Steamboat Springs, Colorado. To be a part owner, the graduate must pay $1,596.00 at the end of each year for the next 19.00 years. If the graduate’s discount rate is 7.00%, what is the cost of this opportunity in today’s dollars? In other words, what is the most the graduate should be willing to pay today instead of making payments?
An investor is considering an offer to buy equity in a start-up company. The investor will not receive in cash flows from the company until 11.00 years from today. At that time he will receive 9.00 consecutive annual payments of $56,175.00. The investor wants a 20.00% return on his investment. How much can he pay today for this opportunity to receive his return?