Question

In: Finance

you are given the following time line year 1 +2,000 year 2 +2,000 year 3 +2000...

you are given the following time line year 1 +2,000 year 2 +2,000 year 3 +2000 year 4 +500 year 5 +500 year 6 +500 what is the value of the cash flow stream today if the discount rate is 16%?

Solutions

Expert Solution

Calculating the Present Value Today of cashFlow Stream if the discount rate is 16%:-

Year Cash Flow Stream ($) PV Factor @16% Present Value of Cash Flow Stream ($)
1                                  2,000.00 0.86207                         1,724.14
2                                  2,000.00 0.74316                         1,486.33
3                                  2,000.00 0.64066                    1,281.3153
4                                      500.00 0.55229                          276.146
5                                      500.00 0.47611                          238.057
6 500.00 0.41044                          205.221
                        5,211.20

So,  the value of the cash flow stream today is $5211.20


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