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Preeti has an investment that is worth 58,800 dollars and has an expected return of 11.6...

Preeti has an investment that is worth 58,800 dollars and has an expected return of 11.6 percent. The investment is expected to pay her 47,100 dollars in 3 year(s) from today and X dollars in 8 year(s) from today. What is X?

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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

58800=47100/1.116^3+X/1.116^8

58800=(47100*0.719461263)+(X/1.116^8)

X=(58800-33886.62549)*1.116^8

=$59944.05(Approx).

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