Question

In: Finance

If you require an annual return of 12%, what is the present value of this cash flow stream? Round your answer to the nearest cent. Do not round intermediate calculations.

You own a security with the cash flows shown below.

0 1 2 3 4
0 610 375 250 290

If you require an annual return of 12%, what is the present value of this cash flow stream? Round your answer to the nearest cent. Do not round intermediate calculations.
$

Solutions

Expert Solution

Present value=Cash flows*Present value of discounting factor(rate%,time period)

=610/1.12+375/1.12^2+250/1.12^3+290/1.12^4

which is equal to

=$1205.84(Approx)

jeff jeffy answered 2 years ago
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