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3. An investment in a snow-cone stand is expected to have a 6-month life. It is...

3. An investment in a snow-cone stand is expected to have a 6-month life. It is expected to generate a series of CFs consisting of $800 per month for the next 6 months. Using a discount rate of 2% per month in your calculation, what’s the present value of this stream of expected CFs?

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Expert Solution

Month Cashflows Present Value of Cashflows
1 $                  800.00 $                                         784.31
2 $                  800.00 $                                         768.94
3 $                  800.00 $                                         753.86
4 $                  800.00 $                                         739.08
5 $                  800.00 $                                         724.58
6 $                  800.00 $                                         710.38
Present Value => $                                     4,481.14
Rate of Interest 2% per month

Present Value of Cashflow= [ Cashflow / ( 1 + rate )Months ]

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jeff jeffy answered 1 year ago
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