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3 years ago

What is the present value of the following cash flows at a discount rate of 9 percent?

Business

1 answer:

frutty [35]3 years ago

4 0

Answer:

Year 1 PV = 91,743.12

Year 2 PV =126,251.99

Year 3 PV = 154,436.70

Explanation:

The present value of future sum is the amount that ought to be invested today at interest rate compounded annually to equal the sum at the end of a particular period.

The present value of a future sum is given as follows:

PV = FV × PV (1+r)^(-n)

PV - present value

FV - Future value

r- interest rate

n- number of years

Year 1 PV = 100,000× 1.09^(-1) =91,743.12

Year 2 PV = 150,000× 1.09^(-2) =126,251.99

Year 3 PV = 200,000× 1.09^(-3) = 154,436.70

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