Answer:
$763,057
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1-6 = $89,000
Cash flow in year 7 = 79,000
Cash flow in year 8 = 69,000
Cash flow in year 9= 59,000
Cash flow in year 10 = 49,000 + $790,000 = 839,000
I = 11%
Present value = $763,057
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
