Question

A) An investment will pay $100 at the end of each of the next 3 years, $400 at the end of Year 4, $600 at the end of Year 5, and $800 at the end of Year 6. If other investments of equal risk earn 5% annually, what is its present value? Round your answer to the nearest cent.

B) What is its future value? Round your answer to the nearest cent.

Answer 1

(A)

Year	Cashflow	PVF @ 5%	PV
1	100	0.952	95.24
2	100	0.907	90.70
3	100	0.864	86.38
4	400	0.823	329.08
5	600	0.784	470.12
6	800	0.746	596.97
	Present Value		$ 1,668.49

(B)

Year	Cashflow	FVF @ 5%	PV
1	100	1.050	105.00
2	100	1.103	110.25
3	100	1.158	115.76
4	400	1.216	486.20
5	600	1.276	765.77
6	800	1.340	1,072.08
	Future Value		$ 2,655.06

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