You are offered an investment that will pay you S200 in year 1 $400 in year...

Question

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business finance

Answer 1

Answer #1

Present Value of the aforementioned cash flow stream is equal to the sum of the individual cash flows discounted at the given interest rate.

Therefore, total present value = 200 / 1.1 + 400 / (1.1)^(2) + 600 / (1.1)^(3) + 800 / (1.1)^(4) = $ 1509.596 ~ $ 1509.6

Hence, the correct option is (a).

Answer 2

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