A project produces a cash flow of 517 in year 1 222 in year

A project produces a cash flow of $517 in year 1, $222 in year 2, and $882 in year 3. If the cost of capital is 14.5%, what is the project’s PV?

Solution

PV = C₁ / (1 + r)¹ + C₂ / (1 + r)² + C₃ / (1 + r)³

PV = $517 / 1.145 + $222 / 1.145² + $882 / 1.145³

PV = $1,208.42