⦁ The present value of $1,000 received at the end of year 1, $1,200 received at...

⦁ The present value of $1,000 received at the end of year 1, $1,200 received at the end of year 2, and $1,300 received at the end of year 3, assuming an opportunity cost of 7 percent, is

Expert Solution

Solution :

Assuming an opportunity cost of 7 percent

The present value of $ 1,000 received at the end of year 1 = $ 934.5794

= $ 934.58 ( when rounded off to two decimal places )

The present value of $ 1,200 received at the end of year 2 = 1,048.1265

= $ 1,048.13 ( when rounded off to two decimal places )

The present value of $ 1,300 received at the end of year 3 = 1,061.1872

= $ 1,061.19 ( when rounded off to two decimal places )

The total of the presnet values of all the receipts from Year 1 to Year 3 = $ 3,043.8932

= $ 3,043.89 ( when rounded off to two decimal places )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago

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