Question

suppose a condo generates $20000 in the first year. if the cash flow grows at 5% per year, the interest rate is 8%, and the building will be sold at the end of 18 yrs with a value of $80000. what is the present value of the condo's cash flow?

Answer 1

Present Value of cash flows = $ 285,183.84

Year	Cash flow with growth of 5%	Present Value Factor at 8%	Present Value of cash flow
0	-	1.00	-
1	20,000.00	0.925926	18,518.52
2	21,000.00	0.857339	18,004.12
3	22,050.00	0.793832	17,504.00
4	23,152.50	0.735030	17,017.78
5	24,310.13	0.680583	16,545.06
6	25,525.63	0.630170	16,085.48
7	26,801.91	0.583490	15,638.66
8	28,142.01	0.540269	15,204.25
9	29,549.11	0.500249	14,781.91
10	31,026.56	0.463193	14,371.30
11	32,577.89	0.428883	13,972.10
12	34,206.79	0.397114	13,583.99
13	35,917.13	0.367698	13,206.65
14	37,712.98	0.340461	12,839.80
15	39,598.63	0.315242	12,483.14
16	41,578.56	0.291890	12,136.39
17	43,657.49	0.270269	11,799.26
18	45,840.37	0.250249	11,471.51
18	80,000.00	0.250249	20,019.92
Total			285,183.84

Where,
i = interest rate:
n = number of years