You will receive three cash flows:(i) $400, today(ii) $1,000, four years from today(iii) $500, eight years...

You will receive three cash flows:(i) $400, today(ii) $1,000, four years from today(iii) $500, eight years from today At an annual effective interest rate i, the combined present value of these three cash flows is $1505.80. At the same annual effective rate i, find the accumulated value of $60 after three years.

Solutions

Expert Solution

Therefore, Effective Annual Interest Rate = 6%

Value of $60 after 3 years = Present Value*[(1+Interest Rate)^Number of Years] = 60*[(1+0.06)^3] = 60*1.191016 = $71.46

jeff jeffy answered 2 years ago

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