Perplexed - Pv / inflation - real life problem

[PERPLEXED]

What is the present value of total dollars received over a 30 lease with the following criteria?
1) monthly payments of $23,000
2) at the end of each 5 yr period lease payments increase by 10%
3) Inflation is assumed to be...
a) 5% each of 1st five years
b) 10% each yr. for 2nd five year
c) 5% for each yr. remaining (20 yrs)
In year 30, what is the present value of a dollar received in yr 30 based on the above stated inflation rates?

 

[Deleted member 4993]

What is the present value of total dollars received over a 30 lease with the following criteria?
1) monthly payments of $23,000
2) at the end of each 5 yr period lease payments increase by 10%
3) Inflation is assumed to be...
a) 5% each of 1st five years
b) 10% each yr. for 2nd five year
c) 5% for each yr. remaining (20 yrs)
In year 30, what is the present value of a dollar received in yr 30 based on the above stated inflation rates?

Since you are stuck in the beginning - let's start with definitions:

What is the definition of "present value" - according to your text-book?

Please share your work with us.

You need to read the rules of this forum. Please read the post titled "Read before Posting" at the following URL:

http://www.freemathhelp.com/forum/th...217#post322217

We can help - we only help after you have shown your work - or ask a specific question (e.g. "are these correct?")

 

[JeffM]

What is the present value of total dollars received over a 30 lease with the following criteria?
1) monthly payments of $23,000
2) at the end of each 5 yr period lease payments increase by 10%
3) Inflation is assumed to be...
a) 5% each of 1st five years
b) 10% each yr. for 2nd five year
c) 5% for each yr. remaining (20 yrs)
In year 30, what is the present value of a dollar received in yr 30 based on the above stated inflation rates?

I am quite confused. Are you trying to calculate what is the present value of the lease payments in dollars of constant purchasing power? Or are you trying to calculate the present value in dollars of the lease payments and trying to calculate the value in present dollars of the future value of the 30th year's payments.