Answer:
Total present value= $100,401.36
Explanation:
Giving the following information:
A property is projected to generate cash flows of $10,000, $12,000, $15,000, and $17,000 at the end of year 1, 2, 3, and 4, respectively. The expected sale price for the property at the end of year 4 is $100,000.
We need to apply the following formula to each cash flow:
PV= FV/(1+i)^n
Cf1= 10,000/1.13= 8,849.56
Cf2= 12,000/1.13^2= 9,397.76
Cf3= 15,000/1.13^3= 10,395.75
Cf4= (17,000 + 100,000)/1.13^4= 71,758.29
Total= $100,401.36
