Asked by Kimberly Medlin on May 20, 2024
Verified
A contract requires payments of $1,500, $2,000, and $1,000 in 100, 150, and 200 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a 3.5% simple interest rate of return?
Discounted
A reduction applied to a price or rate, lowering the original amount.
Simple Interest Rate
The percentage of the principal amount that is paid as interest for a specified period.
Contract
A contract that is recognized and can be enforced by law, formed between two or more participants.
- Employ the concept of discounted cash flow to assess the present valuation of future disbursements.
Verified Answer
NB
Learning Objectives
- Employ the concept of discounted cash flow to assess the present valuation of future disbursements.
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