00:01
So we are given the different cash flows.
00:03
Let's use black here.
00:06
For year 1 we have a cash flow of 470.
00:15
And if the discount rate is, let's see here, discount is 10%, then the discounted cash flow will be 470 times or divided by, let's see here, 1 plus r.
00:51
Which is 1 .10.
00:53
So this is going to be 470 divided by 427 .27.
01:07
In year 2 we have a cash flow of 610.
01:12
So the discounted cash flow then will be 610 divided by 1 .10 squared.
01:20
That is the number of years.
01:23
So that will be 610 divided by 1 .1 squared, 504 .13.
01:33
In year 3 we have a cash flow of 735.
01:38
We discount that by 3 years.
01:42
We get divided by 1 .10 to the 3.
01:49
So 735 divided by 1 .1 to the 3rd power.
01:54
This discounted value is 552 .22.
02:00
And the cash flow in year 4 was 920.
02:05
So when we discount that we get a value of 628 .37.
02:23
And if we add all these up, then we get the present value of 2011 .99.
02:47
So that is when the discount rate is 10...