Suppose the Interest Rate Is 5% and That You Are

question 9

Short Answer

Suppose the interest rate is 5% and that you are to receive three annual payments of $10,000, with the first payment one year from now, the second payment two years from now, and the third payment three years from now. What is the present value of this stream of payments?

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Definitions:

Probability Distribution

A mathematical function that provides the probabilities of occurrence of different possible outcomes for an experiment.

Chance

The occurrence of events in the absence of any obvious intention or cause.

Drink Tea

The action of consuming tea by drinking.

Drink Seltzer

Refers to the act of consuming seltzer water, a carbonated drink that may be flavored but does not contain alcohol.