Compute the present value of an $850 payment made in 10 years when the discount rate is 12 percent.
Answer to relevant QuestionsCompute the present value of $1,000 paid in three years using the following discount rates: 6 percent in the first year, 7 percent in the second year, and 8 percent in the third year. Which cash flow would you rather pay, $425 today or $500 in two years if interest rates are 10 percent? Why?How many years (and months) will it take $2 million to grow to $5 million with an annual interest rate of 7 percent? Ten years ago, Hailey invested $2,000 and locked in a 9 percent annual interest rate for 30 years (end 20 years from now). Aidan can make a 20-year investment today and lock in a 10 percent interest rate. How much money ...Since perpetuity payments continue forever, how can a present value be computed? Why isn’t the present value infinite?
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