Quantitative Problem: You own a security with the cash flows shown below.

Quantitative Problem: You own a security with the cash flows shown below.

0 1 2 3 4

0 630 370 230 320

If you require an annual return of 10%, what is the present value of this cash flow stream? Round your answer to the nearest cent. Do not round intermediate calculations.

 

 

answer:

YEAR CASH FLOW DISCOUNTING FACTOR DISCOUNTED CASH FLOW
1 $630 0.9091 $572.73
2 $370 0.8264 $305.77
3 $230 0.7513 $172.80
4 $320 0.6830 $218.56
TOTAL PRESENT VALUE $1269.86
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