Bill paid $10,000 (at CFO) for an investment that promises to pay $750 at the end of each of the next 5 years, then an additional lump sum payment of $15,650 at the end of the 5th year. What is the expected rate of return on this investment? Your answer should be between 8.12 and 21.96, rounded to 2 decimal places, with no special characters.
Present value is the current worth of a future sum of money, given a specific interest rate or discount rate. It is the concept that money available in the future is worth less than the same amount of money in the present, because of the time value of money. Future value (FV) refers to the value of an investment or an asset at a specified point in the future, assuming a specified rate of return. It is the expected value of a cash flow or a series of cash flows that will occur in the future, after interest has been applied. Future value is calculated by taking the present value of an investment and adding interest, which results in the value of the investment at a future point in time. Future value calculations are important in financial planning, investing, and determining the worth of assets or liabilities in the future.
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