Question

What is the present value of the following cash-flow stream if the interest rate is 4%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Year	Cash Flow
1	$	170
2		370
3		270

Present value

Answer 1

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

• Press the CF button.
• CF0= -0.
• Cash flow for all the years 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 interest rate of 4%.
• Press the down arrow and CPT buttons to get the net present value.

Present value of cash flows at 4% interest rate is $745.58.

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