Your company just signs a $2.2 million contract. The contract calls for a payment of $0.6...
Your company just signs a $2.2 million contract. The contract calls for a payment of $0.6 million today, $0.8 million one year from today, and $0.8 million two years from today. What is this contract worth today if the firm can earn 8% on its money?
if you can show me how to input on a financial calculator please.
Homework Answers
PV = 
[CFi / (1 + r)n]
= $600,000 + [$800,000 / 1.08] + [$800,000 / 1.082]
= $600,000 + $740,740.74 + $685,871.06
= $2,026,611.80
To treat this via financial calculator, we need to put the following values;
CF0 = $600,000; C01 = $800,000; F01 = 2; Press NPV, then put i = 8; then down arrow key, press cpt, which gives $2,026,611.80.
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