What is the present value of the following cash flow stream at a rate of 8.0%?
a. $7,917
b. $8,333
c. $8,772
d. $9,233
e. $9,695
ANS: D
0 | 1 | 2 | 3 | ||
CFs: | $750 | $2,450 | $3,175 | $4,400 | |
PV of CFs: | $750 | $2,269 | $2,722 | $3,493 | |
PV = $9,233 | Found by summing individual PVs. | ||||
PV = $9,233 | Found with a calculator or Excel to automate the process. With a calculator, input the cash flows and I into the cash flow register, then press the NPV key. |