Question: Present value with multiple cash flows Suppose we had an investment that was going to pay $100 at the end of every year for the
Present value with multiple cash flows
Suppose we had an investment that was going to pay $100 at the end of every year for the next 2 years and the discount rate is 5%. How much the most should we pay for this investment today or how much is this investment worth today? First, lets answer how much is the first $100 paid at the end of first year worth today? (Drawing the timeline of cash flows is helpful. And you might use PV factor, financial calculator or excel, but I recommend you use fianncial calculator or excel)
A) $95.24
B) $90.24
C) $105.24
D) $85.24
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