Question

To Find P Given F P/F N - 1 2 3 4 5 6 7 8 9 To Find F Given P F/P 1.1900 1.4161 1.6852 2.0053 2.3864 2.8398 3.3793 4.0214 4.7$2,500 $1,500 4 $1,300 $ 1.100 $900 $900 $900 $900 $900 1 0 1 2 3 4 5 6 7 8 9 10 End of Year Po = ? Click the icon to view th

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Answer #1

Solution:

The question is related to calculation of Present Value of given cash flow. We need to find out the present value at year 0 i.e. today for the given cash flow from year end 1 to 10 by using present value interest factory at 19% from the table provided.

Year End Cash Flow
(A)
Present Value Interest Factor @ 19% (From the table given)
(B)
Present Value
(A*B)
1 $1,500 0.8403             1,260.45
2 1300 0.7062                918.06
3 1100 0.5934                652.74
4 900 0.4987                448.83
5 900 0.419                377.10
6 900 0.3521                316.89
7 900 0.2959                266.31
8 900 0.2487                223.83
9 0 0.209                       -  
10 2500 0.1756                439.00
            4,903.21

Hence, P0 (Present Value at year 0) = $4,903 (rounded to nearest dollar)

Thank you

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