$38,652.76
=
+
+
+
+
=
+
+
+
+
=
82
.
943
,
6
$
33
.
271
,
8
23
.
098
,
7
$
35
.
914
,
6
$
03
.
425
,
9
$
)
10875
.
1
(
635
,
11
$
)
10875
.
1
(
500
,
12
$
)
10875
.
1
(
675
,
9
$
)
10875
.
1
(
500
,
8
$
)
10875
.
1
(
450
,
10
$
PV
5
4
3
2
6.5.
Present Value with Multiple Cash Flows:
Jeremy Fenloch borrowed from his friend a
certain amount and promised to repay him the amounts of $1,225, $1,350, $1,500,
$1,600, and $1,600 over the next five years. If the friend normally discounts investments
at 8 percent annually, how much did Jeremy borrow?
Solution:
0
1
2
3
4
5
├───────┼────────┼───────┼────────┼───────┤
$1,225
$1,350
$1,500
$1,600
$1,600
n = 5;
i
=8%.
$5,747.40
=
+
+
+
+
=
+
+
+
+
=
93
.
088
,
1
$
05
.
176
,
1
$
75
.
190
,
1
$
41
.
157
,
1
$
26
.
134
,
1
$
)
08
.
1
(
600
,
1
$
)
08
.
1
(
600
,
1
$
)
08
.
1
(
500
,
1
$
)
08
.
1
(
350
,
1
$
)
08
.
1
(
225
,
1
$
PV
5
4
3
2
6.6.
Present Value with Multiple Cash Flows:
Biogenesis Inc., expects the following cash
flow stream over the next five years. The company discounts all cash flows at a 23
percent discount rate. What is the present value of this cash flow stream?