Problem #9 (TVM): Tom's accountant suggests that Tom will earn the following cash flow stream from...

Question

Question

Problem #9 (TVM): Toms accountant suggests that Tom will earn the following cash flow stream from a mutual fund investment o

Answer 1

Answer #1

Present Value = Future Value / [1 / (1 + R)ⁿ]

Year Cash Flows Present value Factor Present Value (CF) PVF = 1/(1+R)^n PVF * CF 0 1 0 75 225 0 300 66.96 179.37 2 3 4 0.8928

So, Present Value = $436.99

or $437 (rounded off to nearest whole number)

Answer 2

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