At a 10% annual interest rate (compounded yearly), what is thepresent value of t

Question

At a 10% annual interest rate (compounded yearly), what is thepresent value of the cash flows? To receive full credit you mustuse 2 arithmetic gradients. Construct cash flow diagrams andshow all your work. Year Revenue 1        $100 2         $100 3         $110 4         $120 5         $130 6         $140 7         $150 8         $140 9         $130 10       $120 11       $110 12       $100 13       $100 At a 10% annual interest rate (compounded yearly), what is thepresent value of the cash flows? To receive full credit you mustuse 2 arithmetic gradients. Construct cash flow diagrams andshow all your work. At a 10% annual interest rate (compounded yearly), what is thepresent value of the cash flows? To receive full credit you mustuse 2 arithmetic gradients. Construct cash flow diagrams andshow all your work. Year Revenue 1        $100 2         $100 3         $110 4         $120 5         $130 6         $140 7         $150 8         $140 9         $130 10       $120 11       $110 12       $100 13       $100

Explanation / Answer

100 + 100/(1.1) + 110/(1.1)2 + 120/(1.1)3 +130/(1.1)4 + 140/(1.1)5 +150/(1.1)6 + 140/(1.1)7 +130/(1.1)8 + 120/(1.1)9 +110/(1.1)10 + 100/(1.1)11 +100/(1.1)12 = 925.07 As a general rule: Cash flow/(1 + interest rate)^(year - 1)

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