If the interest rate is 10%, what is the present value of a security that pays...

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Question

If the interest rate is 10%, what is the present value of a security that pays...

If the interest rate is 10%, what is the present value of a security that pays you $1,125 next year, $1210 the year after, and $1339 the year after that?

Present value is ? (round your repsonse to the nearest penny)

business economics

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Answer 1

Answer #1

Solution-

we know that

formula of the Present Value

PV = FV1 / (1+i) + FV2 / (1+i)^2+ FV3 / (1+i)^3

PV = $1,125/1.1 + $1,210/1.12+ $1,339/1.13

PV = 1022.73 + 1080.36 + 1007.96

PV = 3111.05

PV = $3,112

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Answer 2

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