Question

In: Finance

1) You receive $10,000 now for an investment that will give you cash flows of $1000...

1) You receive $10,000 now for an investment that will give you cash flows of $1000 in one year, $2000 in two years, $3000 in three years, and $4000 in four years. If the discount rate is 5% then what is the PV of this investment? (Enter the answer in dollar format without $ sign or thousands comma -> 3519.23 and not $3,519.23 or 3,519.23)

Solutions

Expert Solution

Ans 18648.76

Year Project Cash Flows (i) DF@ 5% DF@ 5% (ii) PV of Project ( (i) * (ii) )
0 10000 1 1                             10,000.00
1 1000 1/((1+5%)^1) 0.952381                                   952.38
2 2000 1/((1+5%)^2) 0.907029                               1,814.06
3 3000 1/((1+5%)^3) 0.863838                               2,591.51
4 4000 1/((1+5%)^4) 0.822702                               3,290.81
NPV                             18,648.76

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