A company has a cash flow in year 3 of +£1800. Assuming that the time value of money is 10 per cent, what is the discounted cash flow at time zero?
A) £1657.02
B) £1803.16
C) £1910.00
D) £1352.57

Question

Quizplus · Accepted Answer

The discounted cash flow (DCF) at time zero can be calculated using the formula: DCF = Cash Flow / (1 + r)^n, where r is the discount rate (10% or 0.10) and n is the number of periods (years) from the present. Plugging in the values: DCF = £1800 / (1 + 0.10)^3 = £1800 / 1.331 = £1352.57.

A Company Has a Cash Flow in Year 3 of +£1800