Given the cash flows in table below. Determine the value of P. i= 6% per year
$$\begin{array} { | l | l | l | l | l | l | l | }
\hline \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \
\hline \text { Cash Flow } & - \mathrm { P } & 400 & 800 & 1200 & 1600 & 1800 \
\hline
\end{array}$$
A) $4709.14
B) $6125.15
C) $5125.63
D) $4978.23

Question

Given the cash flows in table below. Determine the value of P. i= 6% per year
$$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \
\hline \text { Cash Flow } & - \mathrm { P } & 400 & 800 & 1200 & 1600 & 1800 \
\hline
\end{array}$$
A) $4709.14
B) $6125.15
C) $5125.63
D) $4978.23

Quizplus · Accepted Answer

The correct answer is A. The present value of the cash flows can be calculated using the formula:PV = -P + 400/(1+0.06)^1 + 800/(1+0.06)^2 + 1200/(1+0.06)^3 + 1600/(1+0.06)^4 + 1800/(1+0.06)^5PV = -P + 400/1.06 + 800/1.1236 + 1200/1.1910 + 1600/1.2625 + 1800/1.3382PV = -P + 377.36 + 712.68 + 1007.69 + 1268.29 + 1345.68PV = -P + 4709.14To find the value of P, we set PV to 0 and solve for P:0 = -P + 4709.14P = 4709.14

Given the Cash Flows in Table Below A) $470914 B) $6125

Given the Cash Flows in Table Below A) $470914
B) $6125