Present Value of Cash outflows
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The company is deciding whether to invest in a certain capital investment. The investment requires an initial outlay of $55,000 and annual payments of $12,000 made at the end of the year for five years. The company's discount rate is 14%.
What is the present value of cash outflows related to this investment?
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Solution Summary
Solution describes the steps to find out present value of cash outflows associated with an investment.
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Please refer attached file for better clarity of formulas.
Solution:
We know that
PV = FV/(1+r/100)^n
PV = Present Value of cash flow
FV = Future ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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