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Finding Present Value of multiple cash flows

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Seaborn Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18% ? At 24%?

Year 1 950
Year 2 1040
Year 3 1130
Year 4 1075

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Solution Summary

The solution describes the formula and methodology to find present value of multiple cash flows.

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PV of any future cash flow is given by

PV=Future Value of cash flow/(1+discount rate)^number of period

Case 1, discount rate=18%

PV of all cash flows=PV of cash flow at the end of year 1+ PV ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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