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Sagot :
$338522.44 (Approx.)
Present value=Cash flows × Present value of discounting factor(rate%, time period)
= 42500/[tex]1.071^7[/tex]+42500/[tex]1.071^8[/tex]+42500/[tex]1.071^9[/tex]+42500/[tex]1.071^1^0[/tex]+42500/[tex]1.071^1^1[/tex] +42500/[tex]1.071^1^2[/tex]+42500/[tex]1.071^1^3[/tex]+42500/[tex]1.071^1^4[/tex]+42500/[tex]1.071^1^5[/tex]+42500/[tex]1.071^1^6[/tex]+42500/[tex]1.071^1^7[/tex]+42500/[tex]1.071^1^8[/tex]+42500/[tex]1.071^1^9[/tex]+42500/[tex]1.071^2^0[/tex]+42500/[tex]1.071^2^1[/tex]+42500/[tex]1.071^2^2[/tex]+42500/[tex]1.071^2^3[/tex]+42500/[tex]1.071^2^4[/tex]+42500/[tex]1.071^2^5[/tex]+42500/[tex]1.071^2^6[/tex]+42500/[tex]1.071^2^7[/tex]+42500/[tex]1.071^2^8[/tex]+42500/[tex]1.071^2^9[/tex]+42500/[tex]1.071^3^0[/tex]+42500/[tex]1.071^3^1[/tex]+42500/[tex]1.071^3^2[/tex]+42500/[tex]1.071^3^3[/tex]+42500/[tex]1.071^3^4[/tex]
Assuming a specific rate of return, the present value (PV) of a future sum of money or stream of cash flows equals its current worth. Future cash flows are valued at present value according to the discount rate; the higher the discount rate, the lower the present value of the future cash flows. Finding the appropriate discount rate is essential for accurately valuing future cash flows, whether they come from debt obligations or earnings.
The idea of present value holds that a sum of money is worth more today than it will be tomorrow. Or, to put it another way, money received in the future is not as valuable as money obtained now in an identical quantity.
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