We can use either both Future Value or the Present Value formula. We will use the FV formula,
FV = PV(1 + r)t
Solving for r, we get
r = (FV / PV)1/t - 1
r = ($10,241,500 / $12,237,500)1/3 - 1
r = - 5.76%
Notice that the interest rate is negative. This occurs when the FV is less than the PV
FINANCE Ch 5 Time Value of Money KQuestion 2 (of 5) 5.00 points Although appealing to...
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