Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Compute the amount of money to be set aside today to ensure a future value of $3,600 in one year if the interest rate is 10.5% annually, compounded annually.
The amount of money to be set aside is
(Round to the nearest cent as needed.)
Expert Solution
Step 1
Present value means the value of future money . Future cashflow are discounted at a discounted rate, when the discount rate are higher then present value of future cashflow are lower.
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