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Tommy John is going to receive $370,000 in three years. The current market rate of interest is 5%. a. Using the present value of $1

Tommy John is going to receive $370,000 in three years. The current market rate of interest is 5%.

a. Using the present value of $1 table in Exhibit 8, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $

b. Why is the present value less than the $370,000 to be received in the future? The present value is less due to over the 3 years.

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