Question
Compute the present value of annual cash payments of $200 per year, for 4 years, using a discount rate of 5%. PV 0 = (CF
Compute the present value of annual cash payments of $200 per year, for 4 years, using a discount rate of 5%.
PV0 = (CF1 / (1+r)1) + (CF2 / (1+r)2) + (CFn / (1+r)n)
If the rate in the problem was higher, would the solution be higher or lower?
If the time period in the problem was shorter, would the solution be higher or lower?
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
