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# System prepended metadata

title: PID-550

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To calculate the most you should pay for this investment, we need to use the concept of present value. Present value is the current value of a future sum of money, taking into account a specified rate of return. In this case, the specified rate of return is 12 percent.

To calculate the present value of the investment, we need to discount each cash flow back to its present value using the formula:
$$PV = \frac{FV}{(1+r)^n}$$

where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods.

Using this formula, we can calculate the present value of each cash flow as follows:
$$PV_1 = \frac{200}{(1+0.12)^1} \approx 178.57$$

$$PV_2 = \frac{400}{(1+0.12)^2} \approx 318.88$$

$$PV_3 = \frac{600}{(1+0.12)^3} \approx 427.07$$

$$PV_4 = \frac{800}{(1+0.12)^4} \approx 508.41$$

The total present value of the investment is the sum of the present values of each cash flow:
$$PV_{total} = PV_1 + PV_2 + PV_3 + PV_4 \approx 1432.93$$

Therefore, the most you should pay for this investment is approximately $1432.93.

Note that this calculation assumes that the cash flows are received at the end of each year. If the cash flows were received at the beginning of each year, we would need to adjust the calculation accordingly [7].