Answer:
Total PV= $18,706,201.3
Explanation:
Giving the following information:
Year Annual Cash Flows:
1 $4,200,000
2 $4,550,000
3 $6,000,000
4 $4,800,000
5 $3,500,000
Discount rate= 7.5%
<u>To calculate the present value, we need to use the following formula on each cash flow:</u>
<u></u>
PV= FV/(1+i)^n
Cf1= 4,200,000/1.075= 3,906,976.74
Cf2 = 4,550,000/1.075^2= 3,937,263.39
Cf3= 6,000,000/1.075^3= 4,829,763.42
Cf4= 4,800,000/1.075^4= 3,594,242.54
Cf5= 3,500,000/1.075^5= 2,437,955.21
Total PV= $18,706,201.3
