Sarah will receive $10,000 in 3 years and $15,000 in 5 years. The compound discount rate is 6.5% per year. 

Calculate the present value of today of the payments.

 

Transcribed Image Text:

At an annual effective interest rate i, i > 0, the following are equal: (1) The present value of 12,000 at the end of 12 years (ii) The sum of the present values of 3,000 at the end of year t and 63,000 at the end of year 2t (iii) 8,000 immediately Calculate the present value of a payment of 6,000 at the end of year (t + 1). At an annual effective interest rate i, i > 0, the following are equal: (1) The present value of 12,000 at the end of 12 years (ii) The sum of the present values of 3,000 at the end of year t and 63,000 at the end of year 2t (iii) 8,000 immediately Calculate the present value of a payment of 6,000 at the end of year (t + 1).

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SOLUTION To calculate the present value ... View the full answer