[universexf6]

On the Wilet, I think I encountered a problem. It is about the FV.

The explanation quoting the example says,

Note payable : Noninterest baring, due in 3 years.

The rate that should be used is 12% a year.

The book says the accumulated ? imputed interest rate is 0.712 ( = after 3 years ).

Could someone genius enough teach me how this figure is computed?

My calculation is 1.12*1.12*1.12=1.4049, thus I though the imputed interest rate should be

about 0.6 ( = 1.4049-1 ).

I’m really confused, could someone please teach me where I was making a mistake?

[Anonymous]

Hi there,

1 / 1.4049 = .712

Also PV tables could help if provided -> PV of $1 in 3 yrs @ 12% = .712

[Author]

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