Your Uncle has decided to share some of his wealth with you and your sister, Anna. His plan is outlined below. a. The ca

[answerhappygod]

Your Uncle has decided to share some of his wealth with you and
your sister, Anna. His plan is outlined below.
a. The cash flows that you will get
i) $2000 each year for five years starting one year from today
(i.e. you will receive the first payment at t = 1).
ii) The selling price of a painting. You have two options to
choose from regarding when to receive the cash from selling the
painting. You can either sell the painting one year from today at a
price of $6000, or you can wait and sell it 3 years from today at a
price of $8,500.
b. The cash flows that Anna will get
i) $3,000 each year for five years. The first cash flow will
occur 3 years from now (i.e. she will receive the first payment at
t = 3).
ii) Rental income from a property. She has two options to choose
from regarding when she receives the cash from rent. She can either
take rent of $400 each year for an indefinite time period starting
one year from today (i.e. the first cash flow will occur at t = 1),
or she can decide to take the rental income in the following way:
she will receive the first rent worth $300 one year from today
(i.e. t = 1), and after that the rental income will grow each year
at a rate of 5% for an indefinite time period.
Assume that the yearly interest rate is 10%, and interest is
compounded annually.
a. Are you better off by selling the painting one year from
today or three years from today? Points: 2
b. Is Anna better off by receiving $400 rental income each year,
or by receiving $300 first after which the rental income will grow?
Points: 4 c. To whom your uncle is more generous, you or Anna?
Points: 4 *** You have to show your work to get credit.
Please don't do on excel! Trying to understand how to do
by (formulas) showing my work