A2 5b
This question consists of three parts. When performing the calculations, keep as many decimal places as you can for intermediate answers, but round your final answers to two decimal places.
b. You have purchased a three-year inflation-indexed investment. This investment will pay you $X every six months, with each payment adjusted upward for inflation. Let’s say that the proposed first payment is $300 (before inflation adjustment), the average forecasted inflation rate will be 0.5% every six months for the next three years, and your required annual rate of return is 6% (compounded semi-annually). What is the present value of this inflation-indexed investment? (Hint: You cannot use a financial calculator to solve this problem.)
may i please have the answer in formula version?
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