The appropriate discount rate for the following cash flows is 7.28 percent per year. Year Cash Flow 1) $ 2,460 2) 0 3) 3,900 4) 2,150 What is the present value of the cash flows? Solution Calculation of the Future Value Year Cash Flow Discount Future Value 1 2460.00 0.93 2293.06 2 0.00 0.87 0.00 3 3900.00 0.81 3158.70 4 2150.00 0.75 1623.17 Present Values 7074.93 Present Value = Cash Flows( PVAF, rate, life).

1. The appropriate discount rate for the following cash flows is 7.28 percent per year. Year Cash
Flow 1) $ 2,460
2) 0
3) 3,900
4) 2,150
What is the present value of the cash flows?
Solution
Calculation of the Future Value Year Cash Flow Discount Future Value 1
2460.00 0.93 2293.06 2 0.00 0.87 0.00 3 3900.00 0.81 3158.70 4 2150.00 0.75
1623.17 Present Values 7074.93 Present Value = Cash Flows( PVAF,
rate, life)