4.)If an instrument pays $131 in one year and $194 in three years, what is the...

Question

Question

4.)If an instrument pays $131 in one year and $194 in three years, what is the present value of the instrument if the interest rate is 7%?

Answer 1

Answer #1

Present value=Cash flows*Present value of discounting factor(rate%,time period)

=131/1.07+194/1.07^3

which is equal to

=$280.79(Approx)

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Answer 2

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