Compute the present value of a $260 cash flow for the following combinations of discount rates and times.

Compute the present value of a $260 cash flow for the following combinations of discount rates and times. (Do not round intermediate calculations. Round your answers to 2 decimal places.)



a. r = 10%; t = 9 years






Explanation
Some values below may show as rounded for display purposes, though unrounded numbers should be used for actual calculations.

PV = FV / (1 + r)^t

a. PV = $260 / (1.10)⁹ = $110.27

b. PV = $260 / (1.10)¹⁸ = $46.76

c. PV = $260 / (1.05)⁹ = $167.60

d. PV = $260 / (1.05)¹⁸ = $108.04

Calculator computations:

a.

Enter

9

10

–260

N

I/Y

PV

PMT

FV

Solve for

110.27

b.

Enter

18

10

–260

N

I/Y

PV

PMT

FV

Solve for

46.76

c.

Enter

9

5

–260

N

I/Y

PV

PMT

FV

Solve for

167.60

d.

Enter

18

5

–260

N

I/Y

PV

PMT

FV

Solve for

108.04