Biogenesis Inc., expects the following cash flow stream over the next five years. The company discounts all cash flows at a 23 percent discount rate. What is the present value of this cash flow stream

Respuesta :

Answer:

The present value of the cash flows is $ -384,711.72

Find below the missing cash flows:

Year               1                      2            3                   4                5

Cash flow$(1,133,676) $(978,452) $275,455 $878,326 $1,835,444

Explanation:

The computation of the present is done by the cash the cash flows by the discount factor,which is given:1/(1+r)^N

r is the discount rate of 23%

N is the relevant year of cash flow

Year         Cash flow     discount factor:1/(1+23%)^1

1                -$1,133,676      0.81301       (921,687.80)

2                -$978,452       0.66098      (646,739.37)

3                 $275,455        0.53738       148,025.09  

4                 $878,326         0.43690        383,738.43  

5                $1,835,444       0.35520          651,951.94  

total net present value                              (384,711.72)