An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6. If other investments of equal risk earn 7% annually, what is its present value? Round your answer to the nearest cent. $ If other investments of equal risk earn 7% annually, what is its future value? Round your answer to the nearest cent.

present value $ 1,026.16

future value $ 1,539.98

Explanation:

Present Value = $ 100 * 1 / (1.07) ^ 1 + $ 100 * 1 / (1.07) ^ 2 + $ 100 * 1 / (1.07) ^3 + $ 200 * 1 / (1.07) ^4 + $ 300 * 1 / (1.07) ^5 + $ 600 * 1 / (1.07) ^6

=93.45 + 87.34+81.62+152.20+213.23+398.32

= $ 1,026.16

therefore, the correct value is $ 1,026.16

b. Future Value = Present Value * (1 + Rate of Interest) ^ Time

= $ 1,175.63 * (1+0.07) ^ 6

= $ 1,539.98

Hence the correct answer is $ 1,539.98