A project is expected to generate the following cash flow stream. The required rate of returns is 9 percent. Year 1 Year 2 Year 3 $200,000 $300,000 $400,000 a) Calculate the present value of the above cash flow stream.

A project is expected to generate the following cash flow stream. The required rate of returns is 9 percent. Year 1 Year 2 Year 3 $200,000 $300,000 $400,000 a) Calculate the present value of the above cash flow stream.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 28P

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Question

A project is expected to generate the following cash flow stream. The required rate of returns is 9 percent.

Year 1	Year 2	Year 3
$200,000	$300,000	$400,000

a) Calculate the present value of the above cash flow stream.

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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