Question

Compute the present value of an $1,050 payment made in nine years when the discount rate is 11 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

$410.47

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 to 8 = 0

cash flow in year 9 = $1050

i = 11%

Present value = $410.47

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