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Calculate the total present value today (to 2 decimal places) of the following cash flows:

$300 due in 2 years from today
$1,000 due in 5 years from today
$200 due in 15 years from today
Use an interest rate of 12% per annum.

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2 answers
  1. i=0.12
    use
    P=F*(P/F,i,n)=F/((1+i)^n)

    P1=-300/(1.12^3)=213.53
    P2=-1000/(1.12^5)=567.43
    P3=-200/(1.12^15)=36.54
    (negative because money is due in the future)

    P=P1+P2+P3 [present value]

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  2. P1=-300/(1.12^3)=-213.53
    P2=-1000/(1.12^5)=-567.43
    P3=-200/(1.12^15)=-36.54
    (negative because money is due in the future)

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