Question

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

Answer 1

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.