# Present Value and Inflation

For this problem, I will give an example problem from my textbook with a solution for your review. I will then need you to develop one of your own examples illustrating the topic of present value. Your example should center around a hypothetical scenario that uses the same methods and formulas, but substitutes the situation and numbers for your own. Please put mine and your examples and solutions in a Word Document.

EXAMPLE

Present Value

3. An insurance agent wishes to sell you a policy that will pay you $100,000 in 30 years. What is the value of this policy in today's dollars, if we assume a 9% inflation rate, compounded annually?

PV = FV/(1 + i)n where PV is the present value

FV is the future value

i is the interest rate

n is the period

PV = 100,000/(1 + 0.09)30

= 100,000/13.2677

= 7,537.11

https://brainmass.com/business/interest-rates/present-value-inflation-146395

#### Solution Preview

EXAMPLE

Present Value

3. An insurance agent wishes to sell you a policy that will pay you $100,000 in 30 years. What is the value of this policy in today's dollars, if we assume a 9% ...

#### Solution Summary

The expert gives an example of a present value calculation. The inflation for present value is discussed.