Question

What is the present value of the following uneven cash flows assuming an interest rate of 5%?

Options:
A.
$4,842.73
B.
$4,062.43
C.
$4,335.33
D.
$4,214.88

Answer 1

A

Explanation:

You need to discount the future cash flows

year 1, divided by 1+5%

year 2, divided by (1+5%)²

so forth and then add them all up

you'll get A.

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