An investment will pay $1,889 two years from now, $2,098 four years from now, and $1,869 five years from now

Finance Sep 16, 2020

An investment will pay $1,889 two years from now, $2,098 four years from now, and $1,869 five years from now. If the opportunity rate is 10.80 percent per year, what is the present value of this investment?

Expert Solution

Present value of investment = 1,889 / ( 1 + 0.1080)² + 2,098 / ( 1 + 0.1080)⁴ + 1,869 / ( 1 + 0.1080)⁵

Present value of investment = 1538.69 + 1392.023 + 1119.21

Present value of investment = $ 4049.92

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