Question: 3. Time value Personal Finance Problem Jim Nance has been offered an investment that will pay him $650 three years from today. a. If his

3. Time value Personal Finance Problem Jim Nance has been offered an investment that will pay him $650 three years from today.

a. If his opportunity cost is 11% compounded annually, what value should he place on this opportunity today? b. What is the most he should pay to purchase this payment today? c. If Jim can purchase this investment for less than the amount calculated in part (a), what does that imply about the rate of return that he will earn on the investment?

a. What value should Jim place on this opportunity today?

$ (Round to the nearest cent.)

b. What is the most he should pay to purchase this payment today?

$ (Round to the nearest cent.)

c. If Jim pays less than $475.27 computed in part a for the investment, his rate of return will be

greater than/ less than/ or equal to the opportunity cost of 11%.

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