- for the below Cash flow, find the total Present value using 10% interest rate.
years | $ cost |
0 | 13,321 |
1 | - |
2 | - |
3 | 1,230 |
4 | 1,230 |
5 | 1,230 |
6 | 3,866 |
Rate of Interest = 10%
Present value is calclated as: [Cash Flow / (1 + Rate of Interest)^Year]
Present value of cash flow of year 0 =[13,321 / (1 + 0.1)^0] = 13,321
Present value of cash flow of year 3 =[1,230 / (1 + 0.1)^3] = 924.12
Present value of cash flow of year 4 =[1,230 / (1 + 0.1)^4] = 840.11
Present value of cash flow of year 5 =[1,230 / (1 + 0.1)^5] = 763.73
Present value of cash flow of year 6 =[3,866 / (1 + 0.1)^6] = 2,182.26
Year | Cash Flow | Present Value |
0 | 13321 | 13321 |
1 | - | - |
2 | - | - |
3 | 1230 | 924.12 |
4 | 1230 | 840.11 |
5 | 1230 | 763.73 |
6 | 3866 | 2182.26 |
18031.21 |
Sum of Present wale is 18,031.21
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