Friday, 2 October 2015

HOMEWORK HELP present value of the cash flows

You will receive $1,200 at the end of the next 15 years, assuming a 8% discount rate, what is the present value of the cash flows?

FV=$1200    n=15        r=8%

 FV=PV(1-r)^n

1200=PV(1-8/100)^15

1200=PV(0.92)^15

1200=PV(0.286297404)

PV=1200/0.286297404=4191.45153


PV=$4191.45153