Today is January 1, 2015

Finance Dec 29, 2020

Today is January 1, 2015. On the first day of the years 2016 through 2035, you will receive $10,000. If cash flows are discounted at 10% per year, the present value of these cash flows as of today (rounded to the nearest dollar) is

Expert Solution

Computation of Present Value using PV Function in Excel:

=-pv(rate,nper,pmt,fv,type)

Here,

PV = Present Value = ?

Rate = 10%

Nper = From 2015 to 2035 = 20 Periods

PMT = $10,000

FV = 0

type = 0

Substituting the values in formula:

=-pv(10%,20,10000,0)

PV or Present Value = $85,135.64 or $85,136.

So, present value of these cash flows as of today is $85,136.

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