Answer to Question #44185 in Finance for Bongiwe

Question

On 1 January 2008, bob Jones received a lump sum of R 200 000. He invested the full amount in a fixed deposit paying interest at 7% p.a. compounded monthly. The maturity date of this investment is 31 December 2010. The following annual inflation rates have been predicted for the given calender years: For 2008-8,3%; For 2009-8,5%; For 2010-8,7%. Bob regards the annual inflation rate as his personal required rate of return for that year? Calculate the Net Present Value of this investment?