a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=12230/1.036+24460/1.036^2+36690/1.036^3
=$67591.18(Approx).
b.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
A=12230*(1.036)^2+24460*(1.036)+36690
=$75156.97(Approx).
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