Question

What is the most you are willing to pay today for an investment that would return $300 1 year from today?

                         $300 2 years from today,

                         $300 3 years from today,

                         $300 4 years from today,

                         $300 5 years from today,

                         $300 6 years from today,

                         $300 7 years from today,

                         $300 8 years from today,

                         $300 9 years from today,

                         $300 10 years from today,

                         $300 11 years from today?

Assume all investments earn an annual interest rate of 10%, compounded

Answer 1

Max Amount that can be paid = PV of CF

PV of CF = CF * PVF(r%, n)

PVF(r%, n) = 1 / ( 1+r)^n

Where n is Int rate per period
n - No. of periods

Assuming Yearly compounding.

PV of Cfs:

Year	CF	PVF @10%	PV of CF
1	$ 300.00	0.909091	272.7273
2	$ 300.00	0.826446	247.9339
3	$ 300.00	0.751315	225.3944
4	$ 300.00	0.683013	204.904
5	$ 300.00	0.620921	186.2764
6	$ 300.00	0.564474	169.3422
7	$ 300.00	0.513158	153.9474
8	$ 300.00	0.466507	139.9522
9	$ 300.00	0.424098	127.2293
10	$ 300.00	0.385543	115.663
11	$ 300.00	0.350494	105.1482

Pls do rate, if the answer is correct and comment, if any further assistance is required.