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You are offered an investment that will pay you $150 at the end of year one,...

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Finance

You are offered an investment that will pay you $150 at the endof year one, $250 at the end of year four, and $800 at the end ofyear eight. What is the total present value of these three cashflows if the discount rate is 6%?

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3.6 Ratings (704 Votes)

total present value of these three cash flows                        841.46
Statement showing Cash flows
Particulars Time PVf 6% Amount PV
Cash inflows                            1.00                  0.9434                    150.00                    141.51
Cash inflows                            2.00                  0.8900                             -  
Cash inflows                            3.00                  0.8396                             -  
Cash inflows                            4.00                  0.7921                    250.00                    198.02
Cash inflows                            5.00                  0.7473                             -  
Cash inflows                            6.00                  0.7050                             -  
Cash inflows                            7.00                  0.6651                             -  
Cash inflows                            8.00                  0.6274                    800.00                    501.93
PV of Cash Inflows =PVCI                    841.46

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Transcribed Image Text

You are offered an investment that will pay you $150 at the endof year one, $250 at the end of year four, and $800 at the end ofyear eight. What is the total present value of these three cashflows if the discount rate is 6%?

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