Question

Investment will pay $100 at the end of each of the next 3 years 200 at the end of year 4 350 at the end of yearr 5 and 550 at the end of year 6 if other investments of equal risk earn 4% annually what is its present value Round your answer to the nearest cents.

Answer 1

Value of Any security is PV of future cash Flows from it.
	Discount rate	4%
Year	Cash Flow	[email protected]	PV of Cash Flow
1	$                   100.00	0.9615	$              96.15
2	$                   100.00	0.9246	$              92.46
3	$                   100.00	0.8890	$              88.90
4	$                   200.00	0.8548	$           170.96
5	$                   350.00	0.8219	$           287.67
6	$                   550.00	0.7903	$           434.67
PV of Cash Flows			$        1,170.82