Question

- for the below Cash flow, find the total Present value using 10% interest rate. years...

- 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

Homework Answers

Answer #1

Rate of Interest = 10% = 0.1

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 Total Present wale is 18,031.21

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