The answers are given. I am looking for how to approach this problem and the thinking/work behind it. Help is greatly appreciated.
A good-deal broker offers you the following good-deal. If you give him $200 at the end of each year for the next 20 years, he will give you $21,000 at the end of 20 years.
Part a) If money is worth 15% per year to you, is this a good deal?
Answer: This is a good deal (Please explain why though)
Part b) How much should he give you at the end of 20 years for you to be indifferent?
Answer: $20,448.72 (Again, please show work)
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