Ask Question
20 October, 20:32

An investment will pay $150 at the end of each of the next 3 years, $100 at the end of Year 4, $400 at the end of Year 5, and $450 at the end of Year 6. If other investments of equal risk earn 9 percent annually, What is its present value?

+2
Answers (1)
  1. 20 October, 20:58
    0
    Present Value = $978.83

    Explanation:

    Giving the following information:

    An investment will pay $150 at the end of each of the next 3 years, $100 at the end of Year 4, $400 at the end of Year 5, and $450 at the end of Year 6.

    i = 0.09

    We need to use the following formula:

    PV = FV / (1+i) ^n

    For example:

    Year 1 = 150 / 1.09 = 137.61

    Year 4 = 100/1.09^4 = 70.84

    Year 6 = 450/1.09^6 = 268.32

    PV = 978.83
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investment will pay $150 at the end of each of the next 3 years, $100 at the end of Year 4, $400 at the end of Year 5, and $450 at the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers