You expect to receive $1,000 in one year, and $4,000 in three years. If the interest...

You expect to receive $1,000 in one year, and $4,000 in three years. If the interest rate is 12% compounded monthly, what is the present value of all cash flows?

Group of answer choices

$3,739.98

$5,600.00

$6,739.71

$3,683.15

Expert Solution

Effective rate =(1+12%/12)^12-1 =12.6825%
PV of Cash flows =1000/(1+12.6825%)+4000/(1+12.6825%)^3 =3682.15 (Option d is correct option)

jeff jeffy answered 2 years ago

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