Question

You have just purchased an investment that generates the following cash flows for the next four...

You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 11.9 percent, compounded annually.

End of year
1.   $2,335
2.   $916
3.   $4,996
4.   $3,400

What is the present value of this investment if 11.9 percent per year is the appropriate discount rate?

Round the answer to two decimal places. Thank you.

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Answer #1

Ans $ 8552.31

Year Project Cash Flows (i) DF@ 11.9% DF@ 11.9% (ii) PV of Project ( (i) * (ii) )
1 2335 1/((1+11.9%)^1) 0.894                        2,086.68
2 916 1/((1+11.9%)^2) 0.799                            731.54
3 4996 1/((1+11.9%)^3) 0.714                        3,565.60
4 3400 1/((1+11.9%)^4) 0.638                        2,168.50
PV                        8,552.31
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