Respuesta :
Answer:
Explanation:
To calculate the present value of cash flows discounted at the required return of 10.7%, you can use the discounted cash flow (DCF) formula:
�
�
=
�
�
1
(
1
+
�
)
1
+
�
�
2
(
1
+
�
)
2
+
�
�
3
(
1
+
�
)
3
+
…
+
�
�
�
(
1
+
�
)
�
PV=
(1+r)
1
CF
1
+
(1+r)
2
CF
2
+
(1+r)
3
CF
3
+…+
(1+r)
n
CF
n
Where:
�
�
PV = Present Value
�
�
�
CF
i
= Cash flow in year
�
i
�
r = Required return rate (in decimal form)
�
n = Number of years
Given the cash flows and the required return rate, let's calculate the present value of cash flows:
�
�
=
$
1
,
200
,
000
(
1
+
0.107
)
1
+
$
1
,
300
,
000
(
1
+
0.107
)
2
+
$
900
,
000
(
1
+
0.107
)
3
+
$
1
,
000
,
000
(
1
+
0.107
)
4
PV=
(1+0.107)
1
$1,200,000
+
(1+0.107)
2
$1,300,000
+
(1+0.107)
3
$900,000
+
(1+0.107)
4
$1,000,000
Let's calculate:
�
�
=
$
1
,
200
,
000
1.10
7
1
+
$
1
,
300
,
000
1.10
7
2
+
$
900
,
000
1.10
7
3
+
$
1
,
000
,
000
1.10
7
4
PV=
1.107
1
$1,200,000
+
1.107
2
$1,300,000
+
1.107
3
$900,000
+
1.107
4
$1,000,000
�
�
≈
$
1
,
200
,
000
1.107
+
$
1
,
300
,
000
(
1.107
)
2
+
$
900
,
000
(
1.107
)
3
+
$
1
,
000
,
000
(
1.107
)
4
PV≈
1.107
$1,200,000
+
(1.107)
2
$1,300,000
+
(1.107)
3
$900,000
+
(1.107)
4
$1,000,000
�
�
≈
$
1
,
083
,
032.491
+
$
1
,
104
,
881.943
+
$
771
,
911.604
+
$
816
,
073.247
PV≈$1,083,032.491+$1,104,881.943+$771,911.604+$816,073.247
�
�
≈
$
3
,
775
,
899.285
PV≈$3,775,899.285
