Question

An investment in an oil field will yield no operating profit until the end of 4 years, when the investor will receive P113,448,169.  After that, he will receive P113,448,169 at the end of each year for 13 more years.  Find the present value of tis income if money is worth 6% effective.

Answer 1

Answer : Present Value = P835,091,972

See calculations below:

Year	Cash Flow	PVF@6%	NPV
1	-	-	-
2	-	-	-
3	-	-	-
4	-	-	-
5	113,448,169	0.747	84,745,782
6	113,448,169	0.705	79,980,959
7	113,448,169	0.665	75,443,032
8	113,448,169	0.627	71,132,002
9	113,448,169	0.592	67,161,316
10	113,448,169	0.558	63,304,078
11	113,448,169	0.527	59,787,185
12	113,448,169	0.497	56,383,740
13	113,448,169	0.469	53,207,191
14	113,448,169	0.442	50,144,091
15	113,448,169	0.417	47,307,887
16	113,448,169	0.394	44,698,579
17	113,448,169	0.371	42,089,271
18	113,448,169	0.350	39,706,859
Total			835,091,972