If the opportunity cost rate is 7.5 percent, what is the present value of an investment that

Question:

If the opportunity cost rate is 7.5 percent, what is the present value of an investment that pays $500 at the end of this year, $400 at the end of the next year, and $300 at the end of the following year? What is the present value if the payments are made at the beginning of each year?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...

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