Answered: Your friend told you about an NFT…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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Question

Your friend told you about an NFT (Non-fungible Token) that they think will be worth $856 in 6 years. If your required return on investments of this risk is 21.75, what is the most you should be willing to pay for it today?

Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate.

Answer:

Expert Solution

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The concept of money's time worth reveals that any sum today is worth more as compared to the same amount's worth in the future. This is because of the fact that the money today can be invested in multiple investment alternatives and grown over the time span. The current worth of any sum indicates its present value and its accumulated worth is regarded as future value.

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