Consider a prospective project with cash flows per period 1, 2, 3. In addition, you are given

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Question:

Consider a prospective project with cash flows per period 1, 2, 3. In addition, you are given the following term structure of interest rates, i.e., the annual interest rate offered to you today for placing a deposit until the respective time period. What is the terminal value of the project?

Period 1

Cash Flow: 120

Interest rate: 2%

Period 2

Cash Flow: 170

Interest rate: 3%

Period 3

Cash Flow: 177

Interest rate: 4%