The present value of $100 received at the end of year 1,$200 received at the end of year 2,and $300 received at the end of year 3,assuming an opportunity cost of 13 percent is: (Round to the nearest whole dollar)
A) $453
B) $416
C) $1,181
D) $500

Question

Quizplus · Accepted Answer

Step 1 - Take the present value of each cash flow in the future.
PV = 11ea7fdb_fc1d_5efb_a768_3d7c7fa825f5_TB2902_11 PV = 11ea7fdb_fc1d_5efc_a768_c70fefa57c0d_TB2902_11 = $88.50
PV = 11ea7fdb_fc1d_5efd_a768_070ff2e187aa_TB2902_11 = $156.63
PV = 11ea7fdb_fc1d_5efe_a768_ed169a699793_TB2902_11 = $207.92
Step 2 - Add the present value of the individual cash flows together.
88.50 + 156.63 + 207.92 = $453.05
Using a financial calculator:
CFo = 0, C01 = 100, F01 = 1, C02 = 200, F02 = 1, C03 = 300, F03 = 1
NPV I = 13, cpt NPV = $453.04

The Present Value of $100 Received at the End of Year