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MARR & Inflation Rate

Your brother needs $5000 to go to college. He cannot pay you back for 5 years. Then he will pay you $2,500 a year for the next 4 years. The first payment occurs 5 years from today and the total will be $10,000.

a) If your MARR is 10%, is this a good investment?
b) If the inflation rate is 5%, is this still acceptable? Provide quantitative justification for your answer.

Please show steps and all formulas.

Solution Summary

The response addresses the queries posted in an excel file.