Example 5.9, Example 5.16: net worth, Bill Gates Annuity - level stream of cash flows that continue for a specific number of years r = interest rate; t = time periods; C dollars a year. present value of t year annuity = C [ 1/r - 1/(r(1 + r)t) ] nominal interest, r = 60.00% periods (years), t = 30 cash flow, annual, C = $ 49,37,17,09,58,222 solve for this? present value (t = 0) = $ 1,29,00,00,00,000 net worth in 2022 $(1,29,00,00,00,001) annuity factor 13.7648 based on nominal interest rate annual spending $ 93,71,709,582 $ 4,30,00,00,000 stream of cash flows, 1 payment at end of year, for 30 years $#.### billion a year for 30 years Example 5.9, Example 5.16: net worth, Bill Gates long run inflation rate = 3.00% assumption (1 + real interest rate) X (1 + inflation rate) = (1 + nominal interest rate) real interest = 2.91% periods (years), t = 30 annuity factor 19.8237 based on real interest rate annual spending $ 6,50,73,65,860 based on 2022 dollars present value (t = 0) = $ 1,29,00,00,00,000 net worth in 2022 $ 1,29,00,00,00,000.0 stream of cash flows, 1 payment at end of year, for 30 years $#.### billion a year for 30 years Chapter 5, Level Cash Flows using nominal rates Example 5.9 End of Initial Interest Remaining Year Year Balance Payment Earned Balance Balance 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30