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An Investment is expended to yield a single payment of $714,000 in exactly 12 years from...

An Investment is expended to yield a single payment of $714,000 in exactly 12 years from today. What is the fair value of this investment today (rounded to the nearest dollar) based on a required rate of return of 8.0%?

$283,539

$55,093

$472, 325

$661,111

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Answer #1

Future value (FV) = $714,000

Discount rate (r) = 8%

Time period (t) = 12 years

Present value = Future value/(1+r)^t

= 714,000/(1+0.08)^12

= 714,000/0.3971

= $283,539 (rounded)

Option A

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