Answer:
$63,913.50
Explanation:
We are to find the present value of the cash flows from year 4 to 7
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 3 = $0
Cash flow in year 4 = $20,000
Cash flow in year 5 = $21,100
Cash flow in year 6 = $22,900
Cash flow in year 7 = $24,300
I = 6%
Present value = $63,913.50
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
