You invested $10,000on January 1, 2013. You will receive the following cash flow

Question

You invested $10,000on January 1, 2013. You will receive the following cash flows               
from your investment and your required rate of return is 6%:               
At the end of:    You will receive           
2013    $1,000           
2014    $500           
2015    $700           
2016    $1,500           
2017    $2,500           
2018    $2,800           
2019    $1,400           
2020    $5,200           
               
Assuming you do not receive your original $10,000 investment back but only               
receive the above cash flows, what is the present value of the above cash flows?               
Would you accept this investment?

Explanation / Answer

present value of the above cash flows= 1000/1.06 +500/(1.06)^2+---+5200/(1.06)^8

=$11450.84

As Present value is greater than $10000 ,accept the project

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