Question

An investment will pay $50 at the end of each of the next 3 years, $250...

An investment will pay $50 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $550 at the end of Year 6. If other investments of equal risk earn 8% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent.

Present value:

Future value:

Homework Answers

Answer #1

Present Value

Period Cash Flow Discounting Factor @8% Present Value
1 50 0.92592592592 46.296296296
2 50 0.85733882029 42.8669410145
3 50 0.793832241 39.69161205
4 250 0.73502985277 183.757463192
5 350 0.680583197 238.20411895
6 550 0.63016962685 346.593294767
Total 942.41

Future Value

Period Cash Flow Compounding factor @8% Future Value
1 50 1.4693280768 73.46640384
2 50 1.36048896 68.024448
3 50 1.259712 62.9856
4 250 1.1664 291.6
5 350 1.08 378
6 550 1 550
Total 1424.08
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