Question

The present value of the following annual cash flows is $9,920.77. The cash flow at t=2...

  1. The present value of the following annual cash flows is $9,920.77. The cash flow at t=2 is missing. Using an interest rate of 10%, find the value of the missing cash flow. Annual cash flows: $0 at time 0 and time 1, $4,000 at time 3, and $6,000 at time 4.

    $2500

    $2750

    $3000

    $3250
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Homework Answers

Answer #1

As per the details given in the Question-

PREsent value =
Present value = 0 + +    +   
9920.77 = 0 + + 3005.26 + 4098.08
2817.43 =
CAsh flow = 1.21 * 2817.43
CAshflow = 3409.09
Cashflow for 2 year is 3409.09

Year Cashflow Pv Of CF
0 0 0.00
1 0 0.00
2 3409.09 2817.43
3 4000 3005.26
4 6000 4098.08
Present Value 9920.77

PV of inflow is calculated on excel by formula-
=PV(rate,nper,pmt,fv)

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

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