What is the value in year 3 of a $600 cash flow made in year 6 if interest rates are 8 percent?
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
600=P*(1.08)^3
P=600/1.08^3
which is equal to
=$476.30(Approx).
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