Question: Your uncle died last year and left you money in his will. You are to receive $200,000 in three years (time 3) and $200,000 twenty years from today (i.e., in time 20).
(a) What is the value of the inheritance today (in time 0) if the appropriate discount rate is 5% and you compound annually?
(b) If you invest the money when you receive it, how much will it grow to 30 years from today (i.e., in time 30) if you earn 5% each year?