The Present value of an infinite stream of dollar payments of $z (that starts next year) is $z/I when the nominal interest rate, I, is constant. This formula gives the price of a consol -a bond paying a fixed nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant payments over long but not infinite periods, as long as i is constant 1.1. Suppose i-1096. Let $z-100, what is the present value of the consol? 12. ifi-10%, what is the expected present discounted value of a bond that pays $z over the next 10 years? 20 years? 30 years? (Hint: Use the formula from Chapter 14, but remember to adjust for the first payment. 1.3. Repeat the calculations in (1.1) and (1.2) for i-2% and 1-5%.

Over the past several years, joyce chen has been able to save regularly. as a result, today she has $54,188 in savings and investments. she wants to establish her own business in 5 years and feels she will need $100,000 to do so. a. if she can earn 6% on her money, how much will her $54,188 in savings/investments be worth in 5 years? will joyce have the $100,000 she needs? if not, how much more money will she need? b. given your answer to part a, how much will joyce have to save each year over the next 5 years to accumulate the additional money? assume she can earn interest at a rate of 6%. c. if joyce can afford to save only $4,000 a year then, given your answer to part a, will she have the $100,000 she needs to start her own business in 5 years?