Question

7. Given the followin as7, the following beginning-of-the-year cash flow information, determine the present value assuming that the firms opportunity cost of capital is 10%. a. Year1-$2,000 b. Year 2= $3,000 c. Year 3 $4,000 d. Year 4 $6,000 e. Year 5 $8,000 a. S14.005.06 Please write out, I need to learn how to do it by hand. Thank you!
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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=(2000)+3000/1.1+4000/1.1^2+6000/1.1^3+8000/1.1^4

which is equal to

=$14005.06(Approx).

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