Fin 467 final exam mcq solutions (a+ guaranteed)
The present value of future cash flows refers to the amount that would need to be invested today in order to receive a certain amount at some point in the future – whether that is one week, one year, or even ten years from now. In this case, you are looking for how much you would need to pay today in order to receive $80 at the end of 10 years earning 15% interest. To calculate this, you can use the formula PV = FV / (1 + r)^n where PV is the present value, FV is the future value (the $80), r is the rate of return (15%), and n is the number of periods being considered (10). Plugging these numbers into our equation yields: PV = 80/(1+0.15^10) = 38.48. So, you would need to pay $38.48 today in order for your investment grow over time and yield an expected return of $80 after 10 years with 15% interest compounded annually.