You have lent your friend $10500. Your friend offers youthe following instead of paying the $10500 now.End of yearCash flow13200220006504600What is the present value of your friend's payments?(Using an opportunity cost of capital of 7 percent)

Present Value is the discounted future value at a given discount rate. Present Value = Cash…

Answered: End of year Cash flow 1 3200 2000

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Finance

End of year Cash flow 1 3200 2000

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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Question

You have lent your friend $10500. Your friend offers you
the following instead of paying the $10500 now.
End of year
Cash flow
1
3200
2
2000
650
4
600
What is the present value of your friend's payments?
(Using an opportunity cost of capital of 7 percent)

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