The present value interest factors required are those

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Unformatted text preview: l cash flow, as demonstrated earlier (page 141), and then sum the present values, to get the present value of the stream. However, most financial calculators have a function that allows you to punch in all cash flows, specify the discount rate, and then directly calculate the present value of the entire cash flow stream. Because calculators provide solutions more precise than those based on rounded table factors, the present value of Frey Company’s cash flow stream found using a calculator is $1,904.76, which is close to the $1,904.60 value calculated before. TABLE 4.4 Present Value of a Mixed Stream of Cash Flows Year (n) Cash flow (1) PVIF9%,na (2) Present value [(1) (2)] (3) 1 $400 0.917 $ 366.80 2 800 0.842 673.60 3 500 0.772 386.00 4 400 0.708 283.20 5 300 0.650 195.00 Present value of mixed stream aPresent value interest factors at 9% are from Table A–2. $1,904.60 CHAPTER 4 Time Value of Money 153 Spreadsheet Use The present value of the mixed stream of future cash flows also can be calcu...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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