Question

To find the present value of a cash flow expected to be paid or received in the future, you will the future value cash flow by (1 + I)N. What is the value today of a $42,000 cash flow expected to be received 17 years from now based on an annual interest rate of 7%? $20,609 $13,296 $16,620 $132,670

Answer 1

Answer and Explanation:

In order to determine the present value we should divide the future value cash flow by (1 + rate of interest)^number of years

And, the value of the today should be

= $42,000 ÷ (1 + 0.07)^17

= $13,296

Hence, the same should be considered and relevant