Ask Question
21 January, 02:12

An investment will pay you $120 in one year and $200 in two years. If the interest rate is 4%, what is the present value of these cash flows?

+2
Answers (1)
  1. 21 January, 05:58
    0
    Present value = $300.29

    Explanation:

    Giving the following information:

    An investment will pay $120 in one year and $200 in two years. The interest rate is 4%.

    To calculate the present value we need to use the following formula:

    PV = FV / (1+i) ^n

    PV = present value

    FV = final value

    i = interest rate

    n = number of years

    PV1 = 120/1.04^1 = 115.38

    PV2 = 200/1.04^2 = 184.91

    Present value = $300.29
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “An investment will pay you $120 in one year and $200 in two years. If the interest rate is 4%, what is the present value of these cash ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers