An investor invests $2,600 in a company at a steady annual interest yield of 4.99 percent. She earns $390 profit in year 1, earns $467 profit in year 2, and earns $285 profit in year 3. Find the Present Value of this investment asset flow.

An investor invests $2,600 in a company at a steady annual interest yield of 4.99 percent. She earns $390 profit in year 1, earns $467 profit in year 2, and earns $285 profit in year 3. Find the Present Value of this investment asset flow.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

.An investor invests $2,600 in a company at a steady annual interest yield of 4.99 percent. She earns $390 profit in year 1, earns $467 profit in year 2, and earns $285 profit in year 3. Find the Present Value of this investment asset flow.

Expert Solution

Step 1

Given that,

Initial investment = $ 2600

Annual interest rate = 4.99 %

Returns:-

Y1 = $ 390

Y2 = $ 467

Y3 = $ 285

Step by step

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