What is the present value of the following payment stream, discounted at 8% annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3?

a. $5,022.10
b. $5,144.03
c. $5,423.87
d. $5,520.00

= year 1 cash inflows ÷ (1 + rate of interest)^year 2 + year 1 cash inflows ÷ (1 + rate of interest)^year 2 + year 3 cash inflows ÷ (1 + rate of interest)^year 3

= $1,000 ÷ (1 + 0.08)^1 + $2,000 ÷ ( 1 + 0.08)^2 + $3,000 ÷ (1 + 0.08)^3

= $5,022.10

Hence, the present value is $5,022.10

We simply applied the above formula so that the correct value could come

And, the same is to be considered

What is the present value of the following payment stream, discounted at 8% annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3? a. $5,022.10 b. $5,144.03 c. $5,423.87 d. $5,520.00

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Otras preguntas

What is the present value of the following payment stream, discounted at 8% annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3?

a. $5,022.10
b. $5,144.03
c. $5,423.87
d. $5,520.00