Mountain View Hospital has purchased new lab equipment for $146,460. The equipment is expected to last for three years and to provide cash inflows as follows:
Year 1 $47,000
Year 2 $64,000
Year 3 ?
Assuming that the equipment will yield exactly a 14% rate of return, what is the expected cash inflow for Year 3?
PV of cash outflow in at the end of 0 year=-146460
PV of cash in flow at the end of 1 year=FV*PV factor at n=1 and r=0.14
The solution describes the steps for calculating expected cash flow of third year for given yield.