Using Excel At a 4% discount rate, what is the present value of $12, 800 paid to

Question

Using Excel

At a 4% discount rate, what is the present value of $12, 800 paid to your company 90 years from now? Tegan and Sara go to the movies. Sara shows up broke, so Tegan buys both $16 tickets. Sara promises to pay Tegan back $16 when she gets paid in two weeks. Tegan has a personal real discount rate of 3% per week. How much does Tegan lose in this transaction? Channing and Jenna buy the house they want to raise their kids in. The interest rate on the mortgage is quite small, and Jenna figures it is a real interest rate of zero, compared to her personal nominal (not real) discount rate of 12% per year. There is no downpayment. If the mortgage payments amount to $10,000 (2017 dollars) per month for 20 years, and the house is worth $2,000,000 to the couple today, do Channing and Jenna come out ahead or behind when they buy the house? How much?

Explanation / Answer

7. 4% discount for $12,800 is $512. So, the amount payable is $12800-$512 = 12288. After 90 years the amount payable is $12288 * 90 = $1,105,920

8. Tegan loses: ($16 *3)/100 = $0.48 for 1 week. For 2 week he loses : $0.48 *2 = $0.96

*** Please provide the CF score by liking the answer. Thanks in advance.

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