Question
In: Finance
Assume that you have the following possible cash flows: Years 1 and 2 CFs = $300;...
Assume that you have the following possible cash flows:
Years 1 and 2 CFs = $300;
Year 3 CF = $100;
Years 4 and 5 CFs = $200.
What is the value of the cash flows at year 4 if the required discount rate is 5%?
Solutions
Expert Solution
Solution :
The value of the single cash flow at year 4 = $ 164.5405
= $ 164.54 ( when rounded off to two decimal places )
The total value of cash flows at year 4 = $ 285.7143 + $ 272.1088 + $ 86.3838 + $ 164.5405
= $ 808.7474
= $ 808.75 ( when rounded off to two decimal places )
Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.
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