You will be receiving the following payments from a friend -- $100 one year from now,...

You will be receiving the following payments from a friend -- $100 one year from now, $145 two years from now, and $125 three years from now. Calculate the present value of these payments given that the rate of interest is 6% per year. Also, calculate the future value of the payments in year three.

Expert Solution

Discount rate	6.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
100.000	1	94.34	94.34
145.000	2	129.05	223.39
125.000	3	104.95	328.34

present value = 328.34

future value = 328.34 * 1.06^3 = 391.06

jeff jeffy answered 1 year ago

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