Find the present value of the cash flow shown below if interest rate (𝑖) is 10% per year. Year Cash 1 2000 2 5000 3 0 4 -2000 5 3000
Question
Solution 1
The present value (PV) of a future cash flow is calculated using the formula:
PV = CF / (1 + i)^n
where:
- CF is the cash flow
- i is the interest rate
- n is the number of periods
Let's calculate the present value for each year:
- For year 1: PV = 2000 / (1 + 0.10)^1 = 1818.18
- For year 2: P Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
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