Question

Should you invest $60,000 in a project that will return $15,000 per year for five years? You have a minimum return of 8% and expect inflation to hold steady at 3% over the next five years.

Please help...

Answer 1

I would not take the money due to inflation through the years. As we all know prices have increased by a lot, for example; $1 in 1950 is equivalent in purchasing power to about $12.32 today. If you do request a higher amount for the big investment you made. Otherwise ask for a higher price now.

Step-by-step explanation:

The dollar had an average inflation rate of 3.50% per year between 1950 and today, producing a cumulative price increase of 1,131.52%.