As a result of winning the Gates Energy Innovation Award, you are awarded a growing perpetuity. The first payment will occur in a year and will be for $20,000. You will continue receiving monetary awards annually with each award increasing by 5% over the previous award, and these monetary awards will continue forever. If the appropriate interest rate is 10%, what is the present value of this award?
What is the future value of each of the following streams of payments? a. $500 a year for 10 years compounded annually at 5 percent?
What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7 percent?