A financial company advertises on television that they will pay you $55,000 now in exchange for annual payments of $8,500 that y
ou
are expected to receive for a legal settlement over the next 10 years. You estimate the time
value of money at 7 percent
(a) Calculate the present value of the annual payments. Use Exhibit 1-D. (Round time value factor to 3 decimal places and final
answer to the nearest whole number.)
Present value
(b) Would you accept this offer?
No
Yes
Pro
of 10
Mout
are expected to receive for a legal settlement over the next 10 years. You estimate the time
value of money at 7 percent
(a) Calculate the present value of the annual payments. Use Exhibit 1-D. (Round time value factor to 3 decimal places and final
answer to the nearest whole number.)
Present value
(b) Would you accept this offer?
No
Yes
Pro
of 10
Mout
1 answer:
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There are two ways to work this out: normal variables or using "imaginary" numbers.
Normal variables:
![(7+2i)(3-i)\\(7*3)+[7*(-i)]+(3*2i)+[2i*(-i)]\\21-7i+6i-2i^{2}\\\\21-i-2i^{2}](https://tex.z-dn.net/?f=%20%287%2B2i%29%283-i%29%5C%5C%287%2A3%29%2B%5B7%2A%28-i%29%5D%2B%283%2A2i%29%2B%5B2i%2A%28-i%29%5D%5C%5C21-7i%2B6i-2i%5E%7B2%7D%5C%5C%5C%5C21-i-2i%5E%7B2%7D)
Imaginary numbers:
Using the result from earlier:
Now since
, then the expression becomes:
Normal variables:
Imaginary numbers:
Using the result from earlier:
Now since