Q3) For an investment period of three years Mr X intends to save the following amounts:...

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Q3) For an investment period of three years Mr X intends to save the following amounts: $2,000, $2,500, and $3,000, respectiv

business accounting

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Answer 1

Answer #1

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First we have to compute the future value of the investment made by x .


	Year	Cash flow	Future value
	1	2000	2,190.32	2000*(1+4.65%)^2
	2	2500	2,616.25	2500*(1+4.65%)
	3	3000	3,000.00	3000
	Future value =	7,806.57


Now we have to compute the present value of the FV of investment made by x.

Present value or investment required =	7806.57/(1+4.65%)^3
				6,811.50

Ans =				6,811.50

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Answer 2

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