Homework SourseYou will be receiving the following payments from a friend
You will be receiving the following payments from a friend -- $100 one year from now, $145 two years from now, and $125 three years from now. Calculate the present value of these payments given that the rate of interest is 6% per year. Also, calculate the future value of the payments in year three.
Solution
present value = 328.34
future value = 328.34 * 1.06^3 = 391.06
| Discount rate | 6.0000% | ||
| Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
| - | 0 | - | - |
| 100.000 | 1 | 94.34 | 94.34 |
| 145.000 | 2 | 129.05 | 223.39 |
| 125.000 | 3 | 104.95 | 328.34 |
