Question

# Calculate the present value of the given stream of cash flows using the given discount rate....

Calculate the present value of the given stream of cash flows using the given discount rate. The present value you find is between \$24,000 and \$24,100.

 time cash flows discount rate 0 5% 1 \$1,000 2 \$1,500 3 \$2,000 4 \$2,500 5 \$3,000 6 \$3,500 7 \$4,000 8 \$4,500 9 \$5,000 10 \$5,500

Net present value can be solved using a financial calculator. The steps to solve on the financial calculator:

• Press the CF button.
• CF0= -\$0. Since there is no initial cash flow for this question.
• Cash flow for each year should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the NPV button and enter the discount rate of 5%.
• Press enter after that. Press the down arrow and CPT buttons to get the net present value.

Net present value at 5% discount rate is \$23,547.76.

In case of any query, kindly comment on the solution.

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