You have an investment that is worth $36,206 and has an expected return of 19.85 percent per year. The investment is expected to pay you $66,200 in 7 years and $X in 8 years. What is X?

 

To solve for the value of $ X $, we need to account for the investment's value over time. The present value (PV) of the future cash flows is given by the formula:

\[
PV = \frac{C_7}{(1 + r)^7} + \frac{X}{(1 + r)^8}
\]

Where:
- $ PV = 36,206 $ (the current value of the investment),
- $ r = 0.1985 $ (the expected return per year),
- $ C_7 = 66,200 $ (the payment in 7 years),
- $ X $ is the unknown value in 8 years.

Let's plug in the known values and solve for $ X $:

\[
36,206 = \frac{66,200}{(1 + 0.1985)^7} + \frac{X}{(1 + 0.1985)^8}
\]

Now we will compute this step by step.The value of $ X $ (the payment in 8 years) is approximately \$74,788.48.

Would you like a detailed explanation of the steps, or do you have any other questions?

Here are 5 related questions to consider:
1. How does changing the interest rate affect the future value of an investment?
2. What would happen to $ X $ if the investment period was reduced to 6 years?
3. How would you calculate the future value of an investment with multiple cash flows?
4. What are the risks associated with an investment that has a high expected return like 19.85%?
5. How does compound interest influence long-term investments?

**Tip:** When dealing with future cash flows, always discount them back to the present using the appropriate interest rate to ensure an accurate comparison.

You have an investment that is worth $36,206 and has an expected return of 19.85 percent per year. The investment is expected to pay you $66,200 in 7 years and $X in 8 years. What is X?

Learn how to calculate the future cash flow of an investment with a 19.85% annual return. The investment is worth $36,206 today and will pay $66,200 in 7 years. This detailed step-by-step solution helps you find the payment amount in 8 years. Suitable for advanced high school or college students.

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