What lump sum cash-flow in year 7 is equivalent in value to $500 in year 2...

Question

Question

What lump sum cash-flow in year 7 is equivalent in value to $500 in year 2 if the interest rate is 4% compounded annually?

A. $601.22

B. $621.98

C. $657.97

D. $608.33

Answer 1

Answer #1

Answer is Option

D. $608.33

future value of Cash at year 2 =500*(1+4%)^5=$608.33

Answer 2

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