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You have just received a windfall from an investment you made in a? friend's business
You have just received a windfall from an investment you made in a? friend's business. He will be paying you $40,839 at the end of this? year, $81,678 at the end of the following? year, and $122,517 at the end of the year after that? (three years from? today). The interest rate is 8.9% 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)?
Expert Solution
b. Computation of Future Value of Your Windfall in three years? (on the date of the last? payment):
Future Value = Present Value * (1+Rate)^Time
= $201,240.89*(1+8.9%)^3
= $201,240.89 * 1.291468
Future Value = $259,896.17
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