Cash-flow A consists of $2,000 in year 4. Cash-flow B is the "discounted value" (arriving in...

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Cash-flow A consists of $2,000 in year 4. Cash-flow B is the "discounted value" (arriving in...

Cash-flow A consists of $2,000 in year 4. Cash-flow B is the "discounted value" (arriving in year 2) of cash-flow A. If the interest rate is 3% compounded annually, how big is cash-flow B?

business finance

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Answer 1

Answer #1

Cash Flow A- $2k

Cash Flow B discounted value = $2000/(1+r)^n

= 2000/(1+0.03)^4

=$1777

Cash Flow A- Cash Flow B =$223.

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Answer 2

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