You will receive $4,000, three years from now. The discount rate is 10 percent.

a. What is the value of your investment two years from now? Multiply

$4,000 X .909 (one year’s discount rate at 10 percent).

b. What is the value of your investment one year from now? Multiply your answer to part a by .909 (one year’s discount rate at 10 percent).

c. What is the value of your investment today? Multiply your answer to part b by .909 (one year’s discount rate at 10 percent).

d. Confirm that your answer to part c is correct by going to Appendix B

(present value of $1) for n = 3 andi = 10%. Multiply this tabular value by

$4,000 and compare your answer to the answer in part

c. There may be a slight difference due to rounding.