Question

Different cash flow.  Given the following cash​ inflow, what is the present value of this cash flow at 8 %​, 12 %​, and 26​% discount​ rates?

Year​ 1: ​$3,000

Year​ 2: ​$5,000

Years 3 through​ 7: ​$0

Year​ 8: ​$24,000

What is the present value of this cash flow at 8​%, 12%, 26% discount​ rate?

Answer 1

Year	Cash flow	Discount factor @ 8%	Present Value		Cash flow	Discount factor @ 12%	Present Value		Cash flow	Discount factor @ 26%	Present Value
1	$         3,000	0.925926	$   2,777.78		$     3,000	0.892857	$   2,678.57		$    3,000	0.793651	$   2,380.95
2	$         5,000	0.857339	$   4,286.69		$     5,000	0.797194	$   3,985.97		$    5,000	0.629882	$   3,149.41
8	$       24,000	0.793832	$ 19,051.97		$ 24,000	0.71178	$ 17,082.73		$ 24,000	0.499906	$ 11,997.74
Total			$ 26,116.45				$ 23,747.27				$ 17,528.10
Working:
Discount factor		=	(1+i)^-n		Where,
					i	Discount rate
					n	Year
So, discount rate for year:
			At 8%				At 12%			At 26%
1	=	1.08^-1	=	0.925926		1.12^-1	=	0.892857		1.26^-1	=	0.793651
2	=	1.08^-2	=	0.857339		1.12^-2	=	0.797194		1.26^-2	=	0.629882
8	=	1.08^-3	=	0.793832		1.12^-3	=	0.71178		1.26^-3	=	0.499906