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The value today of the following cash flows is $6,423.71 at an interest rate of 5.8 percent. What is the value of the Year 3 cash flow?
Year Cash Flow
1 $1,665
2 1,845
3 ?
4 2,505
a. $1,313.29.
b. $1,202.49.
c. $1,424.09.
d. $408.71.
e. $3,981.73.

Respuesta :

jepessoa

Answer:

c. $1,424.09.

Explanation:

present value = CF1 / 1.058 + CF2 / 1.058² + CF3 / 1.058³ + CF4 / 1.058⁴

$6,423.71 = $1,665 / 1.058 + $1,845 / 1.058² + CF3 / 1.058³ + $2,505 / 1.058⁴

$6,423.71 = $1,573.72 + $1,648.26 + CF3 / 1.058³ + $1,99.24

$1,202.49 = CF3 / 1.058³

$1,202.49 = CF3 / 1.18429

CF3 = $1,202.49 x 1.18429 = $1,424.09

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