You will recieve $5000 three years from now. The discount rate is 8% A. what is
ID: 2664009 • Letter: Y
Question
You will recieve $5000 three years from now. The discount rate is 8%A. what is the value of your investment 2years from now?Mulitiply $5000 x .9e6(one year's discount rate at 8%)
B.what is the value of your investment one year from now?multiply your answer to par a by .926(one year's discount rate at 8%)
Cwhat is the value of your investment today?Multiply your answer to part b by .926 (one year's discount rate at 8%)
D. confirm that your answer to part c is correct by going to Appendix B (present value o $1) for n=3amd i=8%. Multiply this tabular value by $5000 and compare your answer to part c.
Explanation / Answer
You will recieve $5000 three years from now. The discount rate is 8% A. what is the value of your investment 2years from now?Mulitiply $5000 x .9e6(one year's discount rate at 8%) 5,000 x .926 = 4630 B.what is the value of your investment one year from now?multiply your answer to par a by .926(one year's discount rate at 8%) 4630 x .926 = 4287.38 Cwhat is the value of your investment today?Multiply your answer to part b by .926 (one year's discount rate at 8%) 4287.38 x .926 = 3,970.1139 D. confirm that your answer to part c is correct by going to Appendix B (present value o $1) for n=3amd i=8%. Multiply this tabular value by $5000 and compare your answer to part c.
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