Answer:
Present value of a cash flow = $861.24 (Approx)
Step-by-step explanation:
Given:
Cash flow (CF) = $900
Annual rate of interest (r) = 4.5% = 4.5 / 100 = 0.045
Number of year (n) = 1 year
Find:
Present value of a cash flow = ?
Computation:
[tex]Present\ value\ of\ cash\ flow =\frac{cash\ flow}{(1+r)^n}\\\\Present\ value\ of\ cash\ flow =\frac{900}{(1+0.045)^1}\\\\Present\ value\ of\ cash\ flow =\frac{900}{(1.045)}\\\\Present\ value\ of\ cash\ flow =861.244[/tex]
Present value of a cash flow = $861.24 (Approx)
