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You are presented with an investment opportunity that will give you the following stream of cash flows: nothing for the next 3 years; at the following year, an amount of $3,000 per year until year 11; and then an amount of $6,000 per year until year 25. If your required rate of return (APR) is 11% compounded annually, what is the present value today of these cash flows?

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hyderali230

Answer:

Present value of these cash flows are $24,580

Explanation:

Net present value is the sum of present value of all future cash inflows and outflows of a project using discounting method by a required rate of return. It measure the net value of the project's cash flows in present value term.

All the calculation and working is in the attached MS Excel file please find it.

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