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the most you would pay for an investment that pays you x amount in one year and x aount in five years
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the most you would pay for an investment that pays you x amount in one year and x aount in five years

User Ramp
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1 Answer

1 vote

Answer:

  1. the most you can pay for an investment that pays you an X amount during one year = X$ / (1 + discount rate)
  2. the most you can pay for an investment that pays you X amount during five years = [X$ / (1 + discount rate)] + [X$ / (1 + discount rate)²] + [X$ / (1 + discount rate)³] + [X$ / (1 + discount rate)⁴] + [X$ / (1 + discount rate)⁵]

User Sydneyos
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