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In an investment environment, an initial outlay of $1 grows to $1.23 in 3 years. If you are expecting a cash inflow of $500 in 3 years, what's the present value of the cash flow to you?
The discount factor for 3 years is 1/1.23. Hence, the PV of $500 in 3 years is 500/1.23 = 406.5.
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