Assignment:
Present Value: Jim Nance has been offered a future payment of $500 three years from today.
a. If his opportunity cost is 7% compounded annually, what value should he place his opportunity today?
b. What is the most he should pay to purchase this payment today?
c. What is the most he should pay to purchase this payment today?
If jim purchase this payment for less for less than part A , what does that say about the rate of return that he will earn on the investment?
Provide complete and step by step solution for the question and show calculations and use formulas.