At an 8% annual interest rate, what is the present value ofthe cash flows? To re

Question

At an 8% annual interest rate, what is the present value ofthe cash flows? To receive full credit you must use 2
arithmetic gradients. Construct cash flow diagrams and showall your work.

Year Revenue
   1       $300,000
   2       $600,000
   3       $900,000
   4    $1,200,000
   5    $1,500,000
   6    $1,800,000
   7    $1,500,000
   8    $1,200,000
  9       $900,000
   10     $600,000
   11     $300,000
At an 8% annual interest rate, what is the present value of thecash flows? To receive full credit you must use 2
arithmetic gradients. Construct cash flow diagrams and showall your work. At an 8% annual interest rate, what is the present value ofthe cash flows? To receive full credit you must use 2
arithmetic gradients. Construct cash flow diagrams and showall your work.

Year Revenue
   1       $300,000
   2       $600,000
   3       $900,000
   4    $1,200,000
   5    $1,500,000
   6    $1,800,000
   7    $1,500,000
   8    $1,200,000
  9       $900,000
   10     $600,000
   11     $300,000
At an 8% annual interest rate, what is the present value of thecash flows? To receive full credit you must use 2
arithmetic gradients. Construct cash flow diagrams and showall your work.

Explanation / Answer

300,000 + 600,000/(1+.08) + 900,000/(1+.08)2 +1,200,000/(1+.08)3 + 1,500,000/(1+.08)4 +1,800,000/(1+.08)5 + 1,500,000/(1+.08)6 +1,200,000/(1+.08)7 + 900,000/(1+.08)8 +600,000/(1+.08)9 + 300,000/(1+.08)10 = 6,665,388.853 General Rule: Let C = Cash Flow, Let r = interest rate, Let y =year C/((1+r)^(y - 1))

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