Compute the present value, P, for the following cash flows (assume series repeats forever). Show calculation on excel **Problem 5-62: Present Value Calculation**Compute the present value, $ P $, for the following cash flows (assume the series repeats forever).**Cash Flow Diagram Explanation:**- **Timeline:** The cash flow series begins at year 0 and extends indefinitely, repeating every 9 years.- **Cash Flows:** - **Year 4:** $400 - **Year 5:** $300 - **Year 6:** $200 - **Year 9:** $1000 - This pattern repeats perpetually.- **Interest Rate:** $ i = 8\% $This problem involves calculating the present value of a perpetual series of cash flows using the given interest rate. The visual representation helps illustrate when each cash flow occurs along the timeline.

Time value of money is the concept that is widely used by the management and cost accountants to determine the worth of the sum today to be received in the future. Calculation of present value, P: Formula table: Result: Hence, the present value P is 1,796.48.

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Compute the present value, P, for the following cash flows (assume series repeats forever). Show calculation on excel

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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