If you are promised $100 in one year, $200 in two years, and $300 in 3 years, then the present value of the combined amount equals ______ $600 today.

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24-08-2022
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If you are promised $100 in one year, $200 in two years, and $300 in 3 years, then the present value of the combined amount equals ______ $600 today.

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achulaksh achulaksh · Answer 1 · 2022-09-06T11:44:05+02:00

If you are promised $100 in one year, $200 in two years, and $300 in 3 years, then the present value of the combined amount equals less than $600 today.

What Is Present Value?

The idea of present value holds that money today is worth more than it will be in the future. In other words, money received in the future is not as valuable as money obtained today in the same amount. A $1,000 gift today is worth more than a $1,000 gift in five years.
The future value FV is divided by a factor of 1 + I for each interval between the present date and the future date in the present value formula, PV=FV/(1+i)n. For the PV calculation, enter the following data into the present value calculator: The FV, or future value. The formula's n stands for the number of time periods (years) t.
The current value of money that will be received in the future in the form of one or more payments, discounted at a market interest rate, is known as the present value.
The ability for investors to compare values across time makes present value crucial. PV can assist investors in evaluating the potential financial gains from present assets or liabilities. Investors can compute the present value of a security based on its expected future returns, which is used in fields like financial modeling, stock valuation, and bond pricing.

If you are promised $100 in one year, $200 in two years, and $300 in 3 years, then the present value of the combined amount equals less than $600 today.

To learn more about present value, refer to:

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