Question

Coronado Industries will receive $1700000 in 6 years. If the appropriate interest rate is 12%, the present value of the $1700000 receipt is

Answer 1

$861,272.91

Step-by-step explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow each year from year 1 - 5 = 0

Cash flow in year 6 = $1,700,000

I = 12%

PV = $861,272.91

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute