You will receive $100 at the end of year one,$200 at the end of year two,and $300 at the end of year three.What is the present value of these cash flows today if the discount rate is 13 percent annually?
A)$553
B)$453
C)$423
D)$383

Question

Quizplus · Accepted Answer

The present value (PV) of these cash flows can be calculated using the formula PV = FV / (1 + r)^n, where FV is the future value, r is the discount rate, and n is the number of periods. For each cash flow: - Year 1: PV = $100 / (1 + 0.13)^1 = $88.50 - Year 2: PV = $200 / (1 + 0.13)^2 = $156.95 - Year 3: PV = $300 / (1 + 0.13)^3 = $207.58 Adding these together gives a total present value of $88.50 + $156.95 + $207.58 = $453.03, which rounds to $453.

You Will Receive $100 at the End of Year One,$200