Homework SourseAn investment offers 13800 per year for 5 years with the fir
An investment offers $13800 per year for 5 years, with the first payment occurring 8 years from now. If the required return is 15 percent, what is the value of the investment?
Solution
Value of investment = 17,390.75
| Discount rate | 15.0000% | ||
| Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
| - | 0 | - | - |
| - | 1 | - | - |
| - | 2 | - | - |
| - | 3 | - | - |
| - | 4 | - | - |
| - | 5 | - | - |
| - | 6 | - | - |
| - | 7 | - | - |
| 13,800.000 | 8 | 4,511.24 | 4,511.24 |
| 13,800.000 | 9 | 3,922.82 | 8,434.07 |
| 13,800.000 | 10 | 3,411.15 | 11,845.21 |
| 13,800.000 | 11 | 2,966.22 | 14,811.43 |
| 13,800.000 | 12 | 2,579.32 | 17,390.75 |
