The appropriate discount rate for the following cash flows is 10 percent compoun

Question

The appropriate discount rate for the following cash flows is 10 percent compounded quarterly.

Year               Cash Flow

            1                                 $          880    

            2                                             960    

            3                                             0         

            4                                             1,550

What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Present value         $ ?????

(Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) PLEASEEEE

Explanation / Answer

Discount rate is 10%

Present value = Future value x (1+discount rate)-n

n is the year

present value of cash flow of $880 in year 1 will be = $880/(1.1) = $800

present value of cash flow of $960 in year 2 will be = $960/(1.1)2 = $793.39

present value of cash flow of $0 in year 3 will be = 0

present value of cash flow of $880 in year 4 will be = $1,550/(1.1)4 = $1,058.67

Total present value for all the above cash flows = $2,652.06

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