You are scheduled to receive a $750 cash flow in one year, a $1,000 cash flow in two years, and pay a $300 payment in four years. If interest rates are 6 percent per year, what is the combined present value of these cash flows?
A) $1,359.92
B) $1,413.92
C) $1,592.63
D) $1,613.02

Question

Quizplus · Accepted Answer

The present value of each cash flow is calculated using the formula PV = FV / (1 + r)^n. The combined present value is the sum of these individual present values: $750/(1.06)^1 + $1,000/(1.06)^2 - $300/(1.06)^4 = $1,359.92.

You Are Scheduled to Receive a $750 Cash Flow in One