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An investment offers the following cash flows: $269 today, $468 one year from now, $481 in...

An investment offers the following cash flows: $269 today, $468 one year from now, $481 in 2 years, and $308 in 3 years. If the relevant interest rate is 6% per year (an APR, with interest compounded annually), what is the value of the investment 3 years from today (immediately after the cash flow at "year 3" occurs)?

Do not round any intermediate work. Round your final answer to 2 decimal places (ex: if your answer is 12.345678 then you should enter 12.35). Margin of error for correct answers: +/- .05.

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Answer #1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=269*(1.06)^3+468*(1.06)^2+481*(1.06)+308

which is equal to

=1664.09(Approx).

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