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Question 3 : Please calculation the Present value and cash payment reduction. Instruction: Please show the clear calculation and interpretation. Company A sells machinery to

Question 3 : Please calculation the Present value and cash payment reduction.

Instruction: Please show the clear calculation and interpretation.

Company A sells machinery to Company B.

Company B agrees to pay Company A $200,000 at the end of each of the next 5 years, with discount rate 7%.

Instruction :

[1] provide a clear calculation to determine the first year of Present value of cash flow [2] provide a clear calculation for each year cash payment reduction for 5 years. [3] please provide an explanation toward your calculation.

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