Question

a. Find present value of the following cash flows at 3% rate: CF0 = -1000; CF1 = 300; CF2 = 560; CF3 = -90; CF4 = 250. b. What is the future value of these cash flows?

Answer 1

Solution

Statement showing present value of following cash flows

Year	Cash flows	PVF@3%	Present Value
0	-1000	1	-1000
1	300	0.9709	291.27
2	560	0.9426	527.86
3	-90	0.9151	-82.36
4	250	0.8885	222.13
	NPV		- 41.10 ( approx)

Statement showing future value of following cash flows:-

Year	Cash flows	Future Value
0	- 1000	-1125.51
1	300	327.82
2	560	594.10
3	- 90	- 92.70
4	250	250
	Future Value	- 46.29 ( approx)