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Page 149.. sir can u please tell the how to arrive at present value amounts stated at the start of the page.. ie .14954..13974.. and 339580
Are the notes not clear enough?
They are the results of multiplying the cash flow by the relevant discount factor for 7% for 1, 2 and 3 years
flow discount factor @ 7% present value
year 1 16,000 . 9346 14,954
year 2 16,000 . 8734 13,974
year 3 416,000 . 8163 339,580
368,508If your question is really asking “How do we discount future cash flows to present value?” then I suggest that you watch John Moffat’s F2 lectures on present values and discounted cash flows
OK?
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