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Sharon is expecting to following cash flows: -75,000; 45,000; 10,000, and -500, in years 1, 2,...

Sharon is expecting to following cash flows: -75,000; 45,000; 10,000, and -500, in years 1, 2, 3, and 4, respectively. If the appropriate discount rate is 9%, what is the present value of this cash flow stream?

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Answer #1

We know that,

Present Value = Amount/(1+discount rate)^1 + Amount/(1+discount rate)^2 +Amount/(1+discount rate)^3 +Amount/(1+discount rate)^4 +.............

Discount Rate = 9%

Amount in year 1 = -75000

Amount in year 2 = 45000

Amount in year 3 = 10000

Amount in year 4 = -500

Present Value = -75000/(1+0.09)^1 + 45000/(1+0.09)^2 + 10000/(1+0.09)^3 - 500/(1+0.09)^4

= -23564.12 Answer

Please let me know in case you have any queries and I will be happy to assist you.

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