Answer:
$9,416.75
Explanation:
Present value is the sum of discounted cash flows.
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = $2500
Cash flow in year 3 = 0
Cash flow in year 4 = $2500
Cash flow in year 5 = 0
Cash flow in year 6 = $2500
Cash flow in year 7 = 0
Cash flow in year 8 = $2500
Cash flow in year 9 = 0
Cash flow in year 10 = $2500
Present value = $9416.75
To find the PV using a financial calacutor:
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