UTS 601

A man sell Winter Hoodie Jacket. And The Man has an opportunity to receive $450 two year from now. If she can earn 8% on her sale in the normal course of events, what is the most she should pay now for this opportunity?

We can know :
FV2 = $450, n = 2 and i = 0.08


PV = FVn/( 1 + i )^n


Answer :
PV = $450/〖( 1 + 0.08 )〗^2

= $385.80

The value today (“present value”) of $450 received two year from today, given an opportunity cost of 8% is $385.80.

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