Financial Management: Principles and Applications, 13/e

Long description

The cash flow at each year from 0 to 5 years is shown as follows:

• 0 years: negative 100,000 dollars

• 1 year: 70,000 dollars

• 2 years: 30,000 dollars

• 3 years: 30,000 dollars

• 4 years: 25,000 dollars

• 5 years: 10,000 dollars

The present value for each year shown is as follows:

• 1 year: 59,829 dollars

• 2 years: 21,915 dollars

• 3 years: 18,731 dollars

• 4 years: 13,341 dollars

• 5 years: 4,561 dollars

The total cash flow for year 1 to 5 years equals 118,378 dollars. The text reads, "The present value of the expected cash flows for Years 1 through 5 is 118,378 dollars.

The timeline also shows that:

• Present value of cash flows for Years 1 to 5 equals 118,378 dollars

• Less: Initial cash outlay equals (100,000) dollars

• Equals: Net present value equals ...