Question

The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash...

The appropriate discount rate for the following cash flows is 9 percent compounded quarterly.
Year Cash Flow
1        $1,000               
2          600               
3       0               
4 1,200               
What is the present value of the cash flows?
0 0
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Answer #1

Net present value can be calculated using a financial calculator by inputting the below:

  • Press the CF button.
  • CF0= -$0.
  • Cash flow for each year should be entered.
  • Press Enter and down arrow after inputting each cash flow.
  • After entering the last cash flow cash flow, press the NPV button and enter the discount rate of 9%/4= 2.25%.
  • Press enter after that. Press the down arrow and CPT buttons to get the net present value.

The net present value is $2,649.69.

In case of any query, kindly comment on the solution

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