Which of the following statements is/are correct?
I. At 6% interest, the present value of: $400 for the first year, $600 for the second year, and $800 for the third year is $1,603.00.
II. The future value of the following mixed cash flow stream (if it is from an annuity due at 6% interest): $400 for the first year, $600 for the second year, and $800 for the third year is $1,999 (rounded).
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question

Quizplus · Accepted Answer

Solution using a calculator: CF₀ = 0 CF₁ = 400 CF₂ = 600 CF₃ = 800 I = 6 Solve for NPV = $1,583.05 by calculator Calculator should be in END mode N= 4 (An annuity due earns one extra year of interest) I = 6 PV = -1,583.05 Solve for FV = $1,998.57 by calculator

Which of the Following Statements Is/are Correct