What is the total present value of the following series of cash flows, discounted at 10%?

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What is the total present value of the following series of cash flows, discounted at 10%?

End of year Cash flow

1                $1,000

2                1,000

3                -2,000

4                3,000

0

Answer:

PV       = $1,000(PVIFA10%,2) + (-$2,000)(PVIF10%,3)+$3,000(PVIF1%,4)

= $1,000(1.736) – $2,000(0.751) + $3,000(0.683)

= $1,736 – $1,502 + $2,049 = $2,283

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