Homework Answers
Answer 1: The values provided in the question of calculating the present value of an investment are as follows:
- Future receivable (cash flow) = $ 100,000.
- Interest Rate = 7.5%
- The time period of investment = 25
The formula for calculating the present value of an investment is as follows:
Using the values provided in the question,
Therefore, one needs to invest $ 16,397.91 yearly up-to 25 years with an interest rate of 7.5%.
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