Question

You may to invest in a coffee plantation in South Australia. The investment promises to pay $5,000 at the end of year 3, $5,000 at the end of year 4, $5,000 at the end of year 6 and $10,000 at the end of year 10. Similar investments return approximately 15%. How much are you be prepared to pay for this investment?

Answer 1

figure the present value of the four payments, then add.

That is what you should pay, no more.

Answer 2

Is it like this: 5000/1.15^3+5000/1.15^4+5000/1.15^6+10000/1.15^10=10780?

Answer 3

yes

Answer 4

Thank you again Reiny