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What is the future value of the cash flow after three years

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You have been asked to evaluate the investment option for the pension fund Litla Aura Púkarnir and estimate that it will yield 4,638 at the end of the first year, 6,973 at the end of the second year and 5,000 at the end of the third year. But the investment cost today is 19,000.

Problem a. What is the present value of this investment if the required rate of return is 3%

Problem b. What is the average return on this investment per year, if no interest rates are assumed?

Problem c. What is the future value of the cash flow after three years?

Reference no: EM132658083

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