For a present sum of $750,000, what is the annual worth (in then-current dollars) in years 1 through 5 if the market interest rate is 10% per year and the inflation rate is 5% per year?
What will be an ideal response?
Use market interest rate (if) to calculate AW in then-current dollars
AW = 750,000(A/P,10%,5)
= 750,000(0.26380)
= $197,850
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