Find the net present value (NPV) of the following cash flows when the discount rate is **6**% pa:

$**7,000** **immediately** (t=0);

$**6,000** in **0.5** years (t=0.5); and

$**8,000** in **3** years (t=3).

The net present value of these payments is:

Community Answer

【General guidance】The answer provided below has been developed in a clear step by step manner.Step1/2Discounting the Cash Flows:Year (a)Cash Inflow (b)Discount Factor (c)Discounted Value ( d=b*c)0.5-$6,000(1+0.06)-0.5 =0.97128586-$5,827.715163-$8,000(1+0.06)-3 =0.83961928-$6,716.95424Total =-$12,544.6694ExplanationTherefore,Discounted Value =-$12,544.6694Explana ... See the full answer