In: Finance
Pablo owns a yoga studio that has a cost of capital of 6.19 percent. The yoga studio is expected to produce annual cash flows of 59,900 dollars for 5 years. The first annual cash flow of 59,900 dollars is expected later today. In addition to the annual cash flows of 59,900 dollars, the yoga studio is also expected to produce a special, one-time cash flow of 67,267 dollars in 2 years from today. How much is Pablo’s yoga studio worth?
Discount rate | 6.1900% | ||
Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
59,900.000 | 0 | 59,900.00 | 59,900.00 |
59,900.000 | 1 | 56,408.32 | 116,308.32 |
59,900.000 | 2 | 53,120.19 | 169,428.510 |
67,267.000 | 2 | 59,653.35 | 229,081.86 |
59,900.000 | 3 | 50,023.72 | 279,105.57 |
59,900.000 | 4 | 47,107.75 | 326,213.32 |
worth of the studio = 326,213.32