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An asset is projected to generate 6 annual cash flows of $7,000 starting 3 years from...

An asset is projected to generate 6 annual cash flows of $7,000 starting 3 years from today. If the discount rate is 10%, how much is this asset worth today? Round to the nearest cent.
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Answer #1

Present Value = Cash Flows in respective years * Present Value of Discounting Factor ( Rate, time)

= $ 7000 * 1/(1.10)^ 3+ $ 7000 * 1/(1.10)^4+$ 7000 * 1/(1.10)^5+$ 7000 * 1/(1.10)^6+$ 7000 * 1/(1.10)^7+$ 7000 * 1/(1.10)^8

= $ 25,195.72

Answer : $ 25,195.72

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