If the interest rate is 10%, what is the present value of a security that pays you $1,100 next year, $1,210 the year after, and $1,331 the year after that?

Present value = $3,000

Step-by-step explanation:

Given:

Interest rate = 10%

Security pays = $1,100 next year, $1,210 the year after, and $1,331

Find:

Present value

Computation:

Present value = 1,100/(1 + 0.10) + 1,210/(1 + 0.10)² + $1,331/(1 + 0.10)³

Present value = 1,100/(1.10) + 1,210/1.21 + $1,331/1.331

Present value = $3,000

step-by-step explanation:

given that ab is divided into equal parts as

ac, cd, de, ef, fg, gh, hi, ib.

from this we find that f is the midpoint of ab.

so using mid point formula we find

f = (3,7)

similarly considering fb, we get

h = mid point of fb = ((6,6) and g, mid point of fh is

g = (9/2, 13/2)

i is mid point of hb

so i =(15/2,11/2)