Present and Future Values the present value of the following cash flow stream is $6,785 when discounted
Question:
Present and Future Values the present value of the following cash flow stream is $6,785 when discounted at 10 percent annually. What is the value of the missing cash flow?
Year Cash Flow
1 …………………… $1,500
2 ………………………… ?
3 …………………….. 1,800
4 …………………….. 2,400
Step by Step Answer:
We are given the total PV of all four cash flows If we f...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Related Video
The present value of future cash flows is calculated to determine the value today of a stream of future cash flows. It is calculated by discounting the future cash flows to their present value using a discount rate. The discount rate reflects the time value of money and the risk of the cash flows. It is important because it helps in making investment decisions, capital budgeting, loan decision making, and financial planning. By discounting future cash flows to their present value using a discount rate, it takes into account the time value of money and the risk associated with the cash flows. This allows investors, lenders, and financial planners to evaluate the viability of potential investments, projects, or loan applications, and to estimate the future value of investments or savings. calculating the present value of future cash flows is important in making investment decisions, capital budgeting, loan decision making, and financial planning. It helps to determine the viability of long-term projects, evaluate loan applications, and estimate the future value of investments or savings.
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