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You are planning to sell some furniture and you have two offers. Your friend will give you $100 today, $200 in one year and $300 in two years. A consignment shop will give you $500 today. Your required return is 7%. What is the value of your friend's offer

Answer :

Answer:

$548.95

Explanation:

To find the value of my friend's offer, I would find the present value of the offer

The present value is the sum of discounted cash flows

Cash flow at year zero = $100 

Cash flow at year one = $200 

Cash flow at year two = $300 

Discount rate = 7%

Present value = $548.95

The value of my friends offer is $548.95

I hope my answer helps you

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