You are scheduled to receive a $400 cash flow in one year, a $900 cash flow...

You are scheduled to receive a $400 cash flow in one year, a $900 cash flow in two years, and pay a $700 payment in three years. Interest rates are 8 percent per year. What is the combined present value of these cash flows? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Expert Solution


CALCULATION OF THE PRESENT VALUE OF THE CASH FLOW
INTEREST RATE @ 8%; So Discounting factor is also 8%

Year	Cash Flow	PVF of $ 1 @ 8%	Present Value (Cash Flow X PVF )
1	$ 400	0.9259	$ 370.37
2	$ 900	0.8573	$ 771.60
3	$ -700	0.7938	$ -555.68

	Total Present Value		$ 586.29


Answer = Combined Present Value of the cash flow = $ 586.29

Note: Assume the cash received at the end of each year

jeff jeffy answered 1 year ago

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