Question

You have just received a windfall from an investment you made in a​ friend's business. She will be paying you $ 39 comma 769 at the end of this​ year, $ 79 comma 538 at the end of next​ year, and $ 119 comma 307 at the end of the year after that​ (three years from​ today). The interest rate is 11.7 % per year. a. What is the present value of your​ windfall? b. What is the future value of your windfall in three years​ (on the date of the last​ payment)? a. What is the present value of your​ windfall? The present value of your windfall is ​$ nothing. ​(Round to the nearest​ dollar.) b. What is the future value of your windfall in three years​ (on the date of the last​ payment)? The future value of your windfall in three years is ​$ nothing. ​(Round to the nearest​ dollar.)

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

She will be paying you $39,769 at the end of this​ year, $79,538 at the end of next​ year, and $119,307 at the end of the year after that​.

The interest rate is 11.7 % per year.

A) We need to use the following formula:

NPV= Cf/[(1+i)^n]

NPV= 39769/1.117^1 + 79538/1.117^2 + 119307/1.117^3

NPV= 184,958.1

B) We need to use the following formula:

FV= PV*(1+i)^n

FV= 287,929.41