A stream of cash flows that pays $100 every year for 10 years. The first cash...

A stream of cash flows that pays $100 every year for 10 years. The first cash flow is received at t=1 and you will receive additional $1000 at the end of the 10 years. You have a discount rate of 10%. What is the PV?

Expert Solution

hi please find below the answer let me know if you need any clarificaion -

Computation of present value

	i	ii	iii=i*ii
Year	Cash flow	PVIF @ 10%	present value
1	100	0.9091	90.91
2	100	0.8264	82.64
3	100	0.7513	75.13
4	100	0.6830	68.30
5	100	0.6209	62.09
6	100	0.5645	56.45
7	100	0.5132	51.32
8	100	0.4665	46.65
9	100	0.4241	42.41
10	1100	0.3855	424.10
			1,000.00

Hence, PV =			1,000.00

ekkarill92 answered 2 years ago

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