Question

Using the following to answer question 1(a) and 1(b) 1(a) What is PV in year 2? With interest rate 7%, calculate the PV of following cash flows. Year Payment PV 1,000 1,000 1,000 1,000 1,000 2 4
what is the pv in year 4? With interest rate 7%, calculate the PV of following cash flows. Year PaymentPV 1,000 1,000 1,000 1,000 1,000 2 4 5
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Answer #1

1a

Year Cash Flow Discount rate 7% (PVIF) Present Value
1 1000 0.935 935
2 1000 0.873 873
Total Present Value 1808

1b

Year Cash Flow Discount rate 7% (PVIF) Present Value
1 1000 0.935 935
2 1000 0.873 873
3 1000 0.816 816
4 1000 0.763 763
Total Present Value 3387
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