You have just purchased an investment that generates the following cash flows fo
ID: 2643148 • Letter: Y
Question
You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 7.33 percent.
You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 7.33 percent, compounded annually. How much is this investment worth today?
End of the year
1. $3,700
2. $1,325
3. $2,736
4. $2,552
What is the present value of this investment if 7.33 percent per year is the appropriate discount rate?
Round the answer to two decimal places
Explanation / Answer
Present Value = 3700/(1.0733^1)+1325/(1.0733^2)+2736/(1.0733^3)+2552/(1.0733^^4)
Present Value = 8733.441114