1. You inherited an oil well that will pay you $25000 per year for 25 years with the first payment occurring today. if you think a fair return on the well is 7.5% compounded annually how much should you ask for if you decide to sell it?
2. James invests 1000 for 10 years at a nominal rate of interest of 10%. The rate of inflation is 8% over the 10 year period. Calculate the value at the end of 10 years of James’s investment in today’s dollars.
3. You agree to make 24 deposits of $500 at the beginning of each month into a bank account. at the end of the 24th month you will have 13000 in your account. if the bank compounds interest monthly, what nominal annual interest rate will you be earning?