1. Limited time only! Sign up for a free 30min personal tutor trial with Chegg Tutors
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Present Value

  1. Mar 15, 2008 #1
    1. The problem statement, all variables and given/known data
    What is the permanent income that corresponds to present value of the two period income path Y 1 =100, Y 2 =125 for the real interest rate r=.5? (Note: 50% not ½%!)



    2. Relevant equations

    PV = Y1 + Y2/(1+r)^t

    3. The attempt at a solution


    Correct Answer:

    a) 110

    I did Pv = 100 + 125/1,5 = 183, but the answer is 110!?
     
  2. jcsd
  3. Mar 15, 2008 #2
    i found the anser, it s the definition

    1+r/2+r x y1 + y2/1+r !

    its 109,8
     
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook




Similar Discussions: Present Value
  1. Present value (Replies: 5)

  2. Distributing presents (Replies: 1)

Loading...