Question

In: Finance

Your company expects cash flows of $4,000 per week over the next 2 years

Your company expects cash flows of $4,000 per week over the next 2 years. Calculate the present value of these cash flows if the discount rate provided to you by your accountant is 11%.


Solutions

Expert Solution

Cash flow per week = $              4,000
No weeks in 2 years =52*2= 104
Discount rate =11% pa=11%/52 per week= 0.2115% per week
PV Annuity factor @0.2115% rate for 104 week period=(1-1.002115^-104)/0.2115%=93.26659
So PV of $4000 per week cash flow for 104 weeks =4000*93.26659=$373,066.35

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