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MARR & Inflation Rate

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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.

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Solution Summary

The expert examines MARR and inflation rates. The first payment occurring is determined. The response addresses the queries posted in an excel file.

Solution provided by:
Ashish Sharma, MBA (IP)
Education
  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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