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Calculating expected cash flow

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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 ?

Required :
Assuming that the equipment will yield exactly a 14% rate of return, what is the expected cash inflow for Year 3?

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Solution Summary

The solution describes the steps for calculating expected cash flow of third year for given yield.

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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

Solution provided by:
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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