You have just received a windfall from an investment you made in a? friend's business. She will be paying you 60,000 at the end of the year, 120,000 at the end of next year, 180,000 at the end of the year after that (three years for today). The interest rate is 16% per year.
a. What is the present value of your? windfall?
b. What is the future value of your windfall in three years? (on the date of the last? payment)?
Formula:
PV= 60.000/(1+0.16) + 120,000/(1+0.16)^2 + 180,000/(1+0.16)^3 = 256,222