What Is the Economic Value Today of Each of the Following

question 268

Short Answer

What is the economic value today of each of the following payment streams if money can earn 7.5%? (Note that the two streams have the same total nominal value.)
a) $1,000, $3,000, and $2,000 due in one, three, and five months, respectively.
b) Two $3,000 payments due two and four months from now.

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Definitions:

Agriculture

The science or practice of farming, including cultivation of soil for growing crops and rearing animals to provide food, wool, and other products.

Hunting and Gathering

A traditional subsistence strategy based on the procurement of food by hunting animals and foraging for plants.

Subsistence System

A means by which a society obtains its food and other necessities for survival, often based on hunting, gathering, farming, or herding.

Cultural Changes

Transformations in the beliefs, practices, customs, and values of a society or community over time.