Answer:
$28,301.886.79
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = $6,000,000
Cash flow in year 2 = $6,000,000 x 1.06 = 6,360,000
Cash flow in year 3 = $6,000,000 x 1.06^2 = 6,741,600
Cash flow in year 4 = $6,000,000 x 1.06^3 = 7,146,096
Cash flow in year 5 = $6,000,000 x 1.06^4 = 7574,861.76
I = 6%
PV = $28,301.886.79
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
