Question

Consider five annual cash flows of $7,000 starting in one year, followed by a single cash flow of $4,000 at the end of year six. What is the present value of this stream of cash flows if your discount rate is 7%? Round to the nearest cent.

Answer #1

Ans $ 31366.75

Year | Project Cash Flows (i) | DF@ 7% | DF@ 7% (ii) | PV of Project ( (i) * (ii) ) |

1 | 7000 | 1/((1+7%)^1) | 0.934579 | 6,542.06 |

2 | 7000 | 1/((1+7%)^2) | 0.873439 | 6,114.07 |

3 | 7000 | 1/((1+7%)^3) | 0.816298 | 5,714.09 |

4 | 7000 | 1/((1+7%)^4) | 0.762895 | 5,340.27 |

5 | 7000 | 1/((1+7%)^5) | 0.712986 | 4,990.90 |

6 | 4000 | 1/((1+7%)^6) | 0.666342 | 2,665.37 |

PV | 31,366.75 |

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