Final answer:
To calculate the present value and future value of each bundle, we can use the present discounted value formula and the interest rate of 12%. The present value of Bundle 1 is $218.26 and the future value is $250. The present value of Bundle 2 is $226.83 and the future value is $270.
Step-by-step explanation:
To calculate the present value and future value of each bundle, we can use what is called the present discounted value formula. This formula takes into account the interest rate and the timing of the cash flows. For Bundle 1, we have $200 today and $50 tomorrow. We can calculate the present value of this bundle by discounting the future cash flow using the interest rate of 12%. The present value of Bundle 1 is calculated as Present Value = $200/(1 + 0.12) + $50/(1 + 0.12)^2 = $178.57 + $39.69 = $218.26. The future value of Bundle 1 can be calculated by simply adding the cash flows: Future Value = $200 + $50 = $250. For Bundle 2, we have $120 today and $150 tomorrow. Using the same calculations, the present value of Bundle 2 is Present Value = $120/(1 + 0.12) + $150/(1 + 0.12)^2 = $107.14 + $119.69 = $226.83. The future value of Bundle 2 is Future Value = $120 + $150 = $270.