Suppose a relative has promised to give you $1,000 as a gift the day you graduate. Assuming a constant interest rate of 5%, consider the present and future values of this gift depending on whether you graduate in 1 year or in 2 years. Complete the first row of the table by determining the value of the gift in one and two years if you become engaged today.

Present Value Value in One Year Value in Two Years
Date Received (Dollars) (Dollars) (Dollars)
Today 1,000.00 ? ?
In 1 year ? 1,000.00
In 2 years ? 1,000.00

Complete the first column of the table by computing the present value of the gift if you get engaged in one year or two years. The present value of the gift is if you get engaged in two years than it is if you get engaged in one year.

a.

Date Received        Present Value            Value in 1 year    Value in 2 years

Today                                1,000                           $1,050               $1,102.50

In 1 year                           $952.38                      $1,000

In 2 years                        $907.03                                                  $1,000

Future value in 1 year if $1,000 is received today:

= 1,000 * (1 + 5%)

= $1,050

Future value in 2 years:

= 1,000 * ( 1 + 5%)²

= $‭1,102.5‬

Present value if $1,000 received in a year:

= 1,000/(1 + 5%)

= $952.38

If received in 2 years:

= 1,000 / (1 + 5%)²

= $907.03

b. The present value of the gift is smaller if you get engaged in two years than it is if you get engaged in one year.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi

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