What is the present value of the following uneven cash flow. 150, 350, 750, -85? The...

Question

Question

What is the present value of the following uneven cash flow. 150, 350, 750, -85? The interest rate is 9%

business finance

Answer 1

Answer #1

Given

CF₀ = 150
CF₁ = 350
CF₂ = 750
CF₃ = -85

where, CF_n is the cash flow in period n

r = interest rate - 0.09

PV = CF₀ + CF₁/(1+r) + CF₂/(1+r)² + CF₃/(1+r)³

=> PV = 150 + 350/1.09 + 750/1.09² - 85/1.09³ = $1036.72

Answer 2

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