Question

15. What is the present value of five $800 cash flows that occur at the end of each year for the next five years at a periodic interest rate of 8% compounded annually? The first cash flow occurs a year from now, the second cash flow occurs two years from now, ..., and the fifth cash flow occurs five years from now.

plze if you can faster

Answer 1

Solution:

present value is:

800 . 800 800 800 800 (14)*(1* (143 * * (145

| 800,800 800 800 800

Boot() + ) +(199) + (92+ (99)

800(32) + (2) + (2) + (2) + (2)

625 15625 390625 9765625 676 + 17576 + 456976* 11883761

625 15625 390625 9765625 676 + 17576 + 456976 + 118813761

800 (0.96 + 0.92+ 0.88+ 0.85 + 0.82 )

800 (4.43) = $3544