Homework Answers
If opportunity cost is 3.50%:
Amount payable in 3 years = $15,000
Present Value = Amount payable / (1 + Interest
rate)^Period
Present Value = $15,000 / 1.035^3
Present Value = $13,529.14
If opportunity cost is 7.50%:
Amount payable in 3 years = $15,000
Present Value = Amount payable / (1 + Interest
rate)^Period
Present Value = $15,000 / 1.075^3
Present Value = $12,074.41
If opportunity cost is 10.00%:
Amount payable in 3 years = $15,000
Present Value = Amount payable / (1 + Interest
rate)^Period
Present Value = $15,000 / 1.10^3
Present Value = $11,269.72
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