You are scheduled to receive a $430 cash flow in one year, a $730 cash flow in two years, and pay a $330 payment in three years. If interest rates are 9 percent per year, what is the combined present value of these cash flows?

You are scheduled to receive a $430 cash flow in one year, a $730 cash flow in two years, and pay a $330 payment in three years. If interest rates are 9 percent per year, what is the combined present value of these cash flows?

 

0 = CFO
430 = C01, 1 F01

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730 = C02, 1 F02
−330 = C03, 1 F03
9 = I

NPV = 754.10

Step 1: FV = 430, N = 1, I = 9, => PV = 394.50
Step 2: FV = 730, N = 2, I = 9, => PV = 614.43
Step 3: FV = −330, N = 3, I = 9, => PV = −254.82
Step 4: Sum of 3 PV = 754.10