Question

Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in...

Assume an investment opportunity which provides the following cash flows: 15,000$ in one year, 9,000$ in two years, 8,750$ in three years, 12,000$ in four years and 5,000$ in five years. If the relevant required rate of return for this investment is 8%, what is the investment’s value in year three?

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Answer #1

Solution :

The investment’s value in year three = $ 28,550.97

= $ 28,551 ( When rounded off to the nearest dollar )

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

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