An investment promises a payoff of $995 two and one-half years from today. At a discount...
An investment promises a payoff of $995 two and one-half years from today. At a discount rate of 4.5% per year, what is the present value of this investment?
Homework Answers
Future Payment = $995
Time Period = 2.50 years
Discount Rate = 4.50%
Present Value = Future Payment / (1 + Discount Rate)^Time
Period
Present Value = $995 / 1.045^2.50
Present Value = $891.32
So, the present value of this investment is $891.32
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