Question:
An investment product promises to pay $25,458 at the end of nine years. If an investor feels this
investment should produce a rate of return of 14 percent, compounded annually, what’s the most the
investor should be willing to pay for the investment?
Answer:
b. PV = FV x PV factor,
PV=$25,458 x 0.3075 = $7,828
An investment product promises to pay $25,458 at the end of nine years. If an investor feels this
investment should produce a rate of return of 14 percent, compounded annually, what’s the most the
investor should be willing to pay for the investment?
Answer:
b. PV = FV x PV factor,
PV=$25,458 x 0.3075 = $7,828
