Question

What is the value today of receiving $3,700 at the end of four years, assuming an interest rate of 108 compounded annually? Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollat, (EV of S1, PV of S1: EVA. of S1, and PVA of \$5). Mutiple Choice

a.$2.627
b.$2,527
c.$2.927
d.$2.220

Answer 1

The value today of receiving $3,700 at the end of four years, assuming an interest rate of 108% compounded annually, is approximately $2,526.27.

Step-by-step explanation:

To calculate the present value of receiving $3,700 at the end of four years, we need to use the present value formula. The formula is PV = CF / (1 + r)^n, where PV is the present value, CF is the cash flow, r is the interest rate, and n is the number of periods. In this case, the cash flow is $3,700, the interest rate is 108% (converted to decimal form, it is 1.08), and the number of periods is 4. Plugging these values into the formula, we get:

PV = 3700 / (1 + 1.08)^4 = $2,526.27.

Therefore, the value today of receiving $3,700 at the end of four years, assuming an interest rate of 108% compounded annually, is approximately $2,526.27.