Homework Answers
Answer
Option c
the difference in the future value of the given cash flow at the different rates
difference =PV*(1+i)^n - (PV*(1+nr)
PV=present value =30000
i=compounding interest rate =11.5%
n=years=5
r=simple interest rate =10%
difference =30000*(1.115^5) -30000*(1+0.1*5)
=6700.601
=6700
the value is $6700
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