Jobu is thinking about borrowing 10000 from Darvin He promis

Jobu is thinking about borrowing $10,000 from Darvin. He promises Darvin cash flows (payments) of $5000 for the next three years. If Fred’s cost of capital is 10%, what is the Net Present Value of the investment for Darvin? Show your calculation clearly.

Solution

what is the Net Present Value of the investment for Darvin

=-10000+5000/1.10^1+5000/1.10^2+5000/1.10^3

=2434.26

the above is answer