Question

Calculate the PV of the following (enter only the number): You have an expense of 10,000 at the start of the project, 1,000 for the next 2 years, and a final annual payment annual of 20,000.

Assume a rate of return of 9 %.

Enter your answer rounded to whole dollars.

Answer 1

Present value	Cash flow*(1/(1+r)^n)
where r is interest rate and n is number of year
Calculate present value as shown below:
Year	Cash flow	Discount factor @ 9%		Present value (Cash flow*discount factor)
0	-10000	1.00000	1/(1.09^0)	-$10,000
1	-1000	0.91743	1/(1.09^1)	-$917
2	-1000	0.84168	1/(1.09^2)	-$842
3	-20000	0.77218	1/(1.09^3)	-$15,444
Total				-$27,203
Thus, total present value of each cash outflow is -$27,203