You will receive $7,600 three years from now. The discount rate is 13 percent. a. What...

You will receive $7,600 three years from now. The discount rate is 13 percent. a. What is the value of your investment two years from now? Multiply $7,600 × .885 (one year’s discount rate at 13 percent). (Round your answer to 2 decimal places.) b. What is the value of your investment one year from now? Multiply your rounded answer to part a by .885 (one year’s discount rate at 13 percent). (Round your answer to 2 decimal places.) c. What is the value of your investment today? Multiply your rounded answer to part b by .885 (one year’s discount rate at 13 percent). (Round your answer to 2 decimal places.)

Solutions

Expert Solution

a)Value of investment two years from now = PVF13%,1*Value in 3 years

= .88496*7600

= 6725.70

value of your investment one year from now = PVF13%,2*Value in 3 years

= .78315*7600

= 5951.91

Value of investment today =PVF13%,3*Future value

= .69305*7600

= 5267.18

jeff jeffy answered 9 months ago

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