Help Save& Exit Check my 3 You invest $2,000 today and expect to sell your inves
ID: 2821541 • Letter: H
Question
Help Save& Exit Check my 3 You invest $2,000 today and expect to sell your investment for $4.500 in 10 years a-1. Calculate the present value of the future payoff if the interest rate is 8% (Do not round intermediate calculations Round your answer to 2 decimal places) 10 esent value eflook Print Referencesa-2. Is this a good deal? Yes No b-1. Calculate the present value, if the interest rate is 11%. (Do not round intermediate calculations. Round your onswer to 2 decimal places.) Present value O Type here to searchExplanation / Answer
Answer of Part a-1:
PV = FV / (1+ r)^n
PV = $4,500 / (1 + 0.08)^10
PV = $4,500 / 2.1589
PV = $2,084.40
Answer of Part a-2:
It’s a good deal because present value is more as compare to invested amount
Answer of Part b-1:
PV = FV / (1+r)^n
PV = $4,500 / (1 + 0.11)^10
PV = $4,500 / 2.8394
PV = $1,584.84
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