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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