Given a 14 percent interest rate, compute the present value of deposits made in in the amount of $1,000 in year 1, $1,385 in year 2, $1,270 in year 3, and $1,450 in year 4.

Expert Solution

Year	Cash flow	Discount factor	Present Value
a	b	c=1.14^-a	d=b*c
1	$ 1,000	0.8772	$ 877.19
2	1,385	0.7695	1,065.71
3	1,270	0.6750	857.21
4	1,450	0.5921	858.52

	Total		3,658.64

Thus,
	Present value of deposits		$ 3,658.64

jeff jeffy answered 2 years ago

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