Question

g what is the present value of the following cash-flow stream if the interest rate is 12%? you receive 900 at the end of first year, 100 at the end of second year, and 640 at the end of third year. (12% is annual interest rate and given annual compounding) [please round your answer to the nearest whole number]

Answer 1

1339

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 = 900

Cash flow each year from year 2 = 100

Cash flow each year from year 3 = 640

I = 12%

Present value = 1339

To find the NPV 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