Question

How do you calculate the present value of future cash flows?

Answer 1

The present value of future cash flows is calculated using the formula PV = FV/(1+r)^t, where PV is the present value, FV is the future value, r is the discount rate, and t is the number of periods.

Answer 2

To calculate the present value of future cash flows, you need to determine the future cash flow amounts and the appropriate discount rate. Next, you discount the future cash flows to their present value by dividing them by the selected discount rate. Finally, you add up the present values of all future cash flows to arrive at the total present value.