Question

Question #de4e2

Answer 1

`PV = $82894`

Explanation:

This is a "Net Present Value" problem with three different cash flows. In this form it is really a "Present Value" because no cash was expended at the start. We simply need to evaluate them each and sum them.

Period 1: `10 xx 27000 = 270000`
Period 2: `350000`
Period 3: `480000`
TOTAL AMOUNT: 1100000
TOTAL YEARS: 30

If we are not removing any of the cash flow, the only relevant values are the total amount expected at the end of the period.

Net Present Value Formula
`NPV = -C_o + sum_(i=1)^TC_i/(1 + r)^i`

where `C_0 =` Initial investment (0 in this case)
`C_i` = Cash Flow
`r` = discount rate
`T, i` = Time - number of periods

So, Present Value is just
`PV = sum_(i=1)^TC_i/(1 + r)^i`

`PV = 1100000/(1 + 0.09)^30`

`PV = $82894`

https://www.investopedia.com/terms/p/presentvalue.asp

http://financeformulas.net/Net_Present_Value.html