Question

Discounted Cash Flow Analysis. If the appropriate discount rate for the following cash flows is 7.3%, what is the present value of the cash flows? Please show me how to do this problem using a Texas Instruments BAII Plus Business calculator.

Year     Cash Flow

1              $1,200

2              1,100

3               800

4               600

Answer 1

Year	Cash flow	Discount factor	Present Value
a	b	c=1.073^-a	b*c
1	$       1,200	0.9320	$               1,118
2	1,100	0.8686	$                  955
3	800	0.8095	$                  648
4	600	0.7544	$                  453
Total			3,174