“Your parents have given you $1,000 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 6.75 percent interest. You know that the trip costs $1,025 right now and that the inflation for the year is predicted to be 4 percent. Will you have enough money in a year to purchase the trip?”
Fundamentals of Corporate Finance, 4th Edition
Robert Parrino, David S. Kidwell, Thomas Bates, Stuart L. Gillan
Solution Available in MS-Word File.