Present Value is the discounted future cash flows. Here, the rate of discount is 10% (r).
Now, to calculate the Present Value of a Cash Flow in any year, the formula to be used is, PV = Cash Flow / (1 + r)^Year.
So, for the year 0, Present Value will be 750 / (1+ 10%)^0 = $750
Similarly, for year 1, PV will be 24050 / (1 + 10%)^1 = $21,863.64
Year 2, 3175 / (1 + 10%)^2 = $2,623.97
Year 3, 4400 / (1 + 10%)^3 = $3,305.79
The Present Value of the cash flows shall be calculated as below:
| Particulars | Year | Cash Flow | PVF @ 10% | Present Value |
| Cash Flows | 0 | 750 | 1 | $750.00 |
| Cash Flows | 1 | 24050 | 0.9091 | $21,863.64 |
| Cash Flows | 2 | 3175 | 0.8264 | $2,623.97 |
| Cash Flows | 3 | 4400 | 0.7513 | $3,305.79 |
| Sum of Present Value | $28,543.39 |
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