John has an investment opportunity that promises to pay him $17,500 in four year

Question

John has an investment opportunity that promises to pay him $17,500 in four years. Suppose the opportunity requires John to invest $14,350 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tables provided.)

John has an investment opportunity that promises to pay him $17,500 in four years. Suppose the opportunity requires John to invest $14,350 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1) (Use appropriate factor(s) from the tables provided.)

Explanation / Answer

Present Value: 14350 n = 4 Future Value: 17500 Calculation for i 17500*PVF(5%,4Yrs) looking at value from table 2 17500*0.82 14350 Hence i=5%

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