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10 October, 01:02

You are scheduled to receive a $490 cash flow in one year, a $790 cash flow in two years, and pay a $390 payment in three years. If interest rates are 8 percent per year, what is the combined present value of these cash flows?

a. $890.00

b. $1,280.00

c. $1,440.60

d. $821.41

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Answers (1)
  1. 10 October, 01:06
    0
    The answer is c. $1,440.60

    Explanation:

    Present value = PV of cash flows

    PV = $490 (1.08^-1) + $790 (1.08^-2) + $390 (1.08^-3)

    PV = $1,440.5959 = $1,440.60
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