Question

# Assume ABC Corp. will earn \$550 this year, \$500 one year from now, \$600 two years...

Assume ABC Corp. will earn \$550 this year, \$500 one year from now, \$600 two years from now, \$800 three years from now, \$800 four years from now, and \$1,000 five years from now. Assuming the interest rate of 15.4% and that it will compound annually, what will be the total present value of ABC Corp.’s earnings?

\$2,957.28

\$2,897.94

\$2,894.10

\$2,906.53

Cash Flow in Year 0 = \$550
Cash Flow in Year 1 = \$500
Cash Flow in Year 2 = \$600
Cash Flow in Year 3 = \$800
Cash Flow in Year 4 = \$800
Cash Flow in Year 5 = \$1,000

Interest rate = 15.4%

Present Value = \$550 + \$500/(1+0.154)^1 + \$600 / (1 + 0.154)^2 + \$800 / (1 + 0.154)^3 + \$800 / (1 + 0.154)^4 + \$1,000 / (1 + 0.154)^5
Present Value = \$550 + \$500/(1.154)^1 + \$600 / (1.154)^2 + \$800 / (1.154)^3 + \$800 / (1.154)^4 + \$1,000 / (1.154)^5
Present Value = \$550 + \$433.28 + \$450.55 + \$520.56 + \$451.09 + \$488.62
Present Value = \$2,894.10

#### Earn Coins

Coins can be redeemed for fabulous gifts.