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Present value of future cash flows

XYZ, Inc. has an offer to buy ABC & Sons. XYZ thinks ABC can produce cash flows of $5k, $9k, & $15k over the next three years (respectively). After that, XYZ thinks ABC will be worthless. Using a 14% rate of return, XYZ must make it's purchase decision now. What should XYZ pay today to buy ABC?

Please use Excel (preferably with four columns) to solve.

Solution Preview

XYZ, Inc. has an offer to buy ABC & Sons.  XYZ thinks ABC can produce cash flows of $5k, $9k, & $15k over the next three years (respectively). After that, XYZ thinks ABC will be worthless.  Using a ...

Solution Summary

Calculates present value of future cash flows.

$2.19