Respuesta :
Answer:
Option "B" is the correct answer to the following statement.
Explanation:
Given:
Today invested amount = $1,000
1st payment(C1) = $2,000
2nd payment(C2) = $4,000
3rd payment(C3) = $6,000
Interest rate(r) = 7% = 0.07
Present value ( PV ) = ?
Computation of Present value:
[tex]Present \ value =\frac{C1}{(1+R)^1} +\frac{C2}{(1+R)^2} +\frac{C3}{(1+R)^3}\\ Here , n = 1 , 3, 5\ are \ Consicutive\\So , Present \ value =\frac{C1}{(1+R)^1} +\frac{C2}{(1+R)^3} +\frac{C3}{(1+R)^5}\\Present \ value =\frac{2,000}{(1+0.7)^1} +\frac{4,000}{(1+0.7)^3} +\frac{6,000}{(1+0.07)^5}\\Present \ value =\frac{2,000}{(1.07)^1} +\frac{4,000}{(1.07)^3} +\frac{6,000}{(1.07)^5}\\Present \ value =\frac{2,000}{1.7} +\frac{4,000}{1.225} +\frac{6,000}{1.40}\\Present \ value = 9,412.272[/tex]
Total present value = $1,000 + 9412.272
= $10,412.272
The present value of the cash flows that you will be receiving at a 7% interest rate is B. $10,412.27.
Data and Calculations:
Year Expected Cash PV Factor Present Value
Year 0 $1,000 1 $1,000.00
Year 1 $2,000 0.9346 1,869.20
Year 3 $4,000 0.8163 3,265.20
Year 5 $6,000 0.7130 4,278.00
Total $13,000 $10,412.40
The present value of future cash flows is computed by multiplying the cash flows by each period's discount factor, which is a product of the rate of interest and the period.
Thus, in this case, the present value of the cash flows you will receive is B. $10,412.27.
Learn more: calculating the present values of future cash flows here: https://brainly.com/question/25263508
