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.

jeff jeffy answered 2 years ago
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