Weston Inc. just agreed to pay $8,000 today, $10,000 in one year, and $15,000 in two years to a landowner to explore for, but not extract, valuable minerals
If the landowner invests the money at a rate of 5.5% compounded annually, what is the investment worth two years from today?
What will be an ideal response?
Answer: FV = Σ(PV × (1 + r)n) = $8,000 × (1.055)2 + $10,000 × (1.055)1 + $15,000 × (1.055)0 = $34,454.20.
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