Ty was seriously injured in a planking accident. He successfully sued the railway company and was awarded 700,000.
The railway cannot afford to pay the lump sum immediately and would prefer to make ten annual payments (at the end of each of the next ten years). If the interest rate is 10, then what size of payment makes Ty indifferent between the lump-sum and the payments?
A) 113,921.78
B) 70,000.00
C) 73,907.45
D) 109,074.06
E) 102,862.66
Question 2
The true nominal interest rate equals the real rate plus inflation plus (real rate inflation).
Indicate whether the statement is true or false.
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