Question

You sold a car and accepted a note with the following cash flow stream as your payment. The effective price you received for the car assuming an interest rate of 6.0% is closest to:

Answer 1

Answer:

The right response is "$5986.815".

Explanation:

The given query is incomplete. Please find attachment of the complete query.

The actual price users earn mostly corresponds to the current value of the amount. Throughout cash flows, users get 7000 $, however because of the rate of the interest some must be lowered.

So,

⇒ $PV= (\frac{1000}{1.06} ) + (\frac{2000}{1.06^2}) + (\frac{2000}{1.06^3}) + (\frac{2000}{1.06^4} )$

⇒        $=943.39+1,779.99+1,679.23+1,584.18$

⇒        $=5986.815$ ($)