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

Question

Kingston Donaldson

Business

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

+2

Answers (1)

Know the Answer?

Guadalupe · Answer 1

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

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. $890.00b. $1,280.00c. $1,440.60d. $821.41

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