Question
In: Finance
Determine cash flows, r, and n You are considering an investment that has a payoff of...
Determine cash flows, r, and n
| You are considering an investment that has a payoff of $4,707.79 in 2 years. If the interest rate is 11.68%, and interest is compounded annually, then what is this investment worth to you today? | |||||||||||||
Solutions
Expert Solution
Investment will pay a Cash flow in 2 years(Cashflow) = $4707.79
Interest rate(r) = 11.68%
No of years(n) = 2 years
Calculating the Present value of Cashflow today:-
Present Value = Cashflow in year2/(1+r)^n
Present Value= $4707.79/(1+0.1168)^2
Present Value= $4707.79/1.24724224
Present Value = $3774.56
So, Investment worth today is $3774.56
jeff jeffy answered 2 years agoRelated Solutions
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