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

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:

1. For year 1: PV = 2000 / (1 + 0.10)^1 = 1818.18
2. For year 2: PV = 5000 / (1 + 0.10)^2 = 4132.23
3. For year 3: PV = 0 / (1 + 0.10)^3 = 0
4. For year 4: PV = -2000 / (1 + 0.10)^4 = -1369.86
5. For year 5: PV = 3000 / (1 + 0.10)^5 = 1862.74

Now, add up all these present values to get the total present value of the cash flow:

Total PV = 1818.18 + 4132.23 + 0 - 1369.86 + 1862.74 = 6443.29

So, the present value of the cash flow is approximately 6443.29.