Answer:
Present value = $7107.76379 rounded off to $7107.76
Explanation:
The present value of cash flows can be calculated by discounting each of the cash flow back to today's value and summing them up. The present value of the cash flows can be calculated using the following formula,
Present Value = CF1 / (1+r) + CF2 / (1+r)^2 + .... + CFn / (1+r)^n
Where,
Present value = 2480 / (1+0.0738) + 0 + 3920 / (1+0.0738)^3 +
2170 / (1+0.0738)^4
Present value = $7107.76379 rounded off to $7107.76
