Question

Calculate the present value of the following cash flows given a discount rate of 12%:

	Year 1	Year 2	Year 3	Year 4
Cash Flows	$1,500	$8,500	$12,500	$11,000

Answer 1

Solution :

Year 1 : PV of cash flow of $ 1,500 at 12 % discount rate = $ 1,339.29

Year 2 : PV of cash flow of $ 8,500 at 12 % discount rate = $ 6,776.15

Year 3 : PV of cash flow of $ 12,500 at 12 % discount rate = $ 8,897.25

Year 4 : PV of cash flow of $ 11,000 at 12 % discount rate = $ 6,990.70

Please find the attached excel sheet containing the detailed calculation of the solution.