Answer:
$10,542.932
Explanation:
Data provided in the question:
Earning in 2 years = $6,000
Earning in 3 years = $4,000
Earning in 4 years = $2,000
Discount rate, r = 5%
Now,
Present value potential investment = ∑(Cash flow × Present value Factor)
Present value factor = [ 1 + r]⁻ⁿ
n is the number of year
Thus,
Present value potential investment
= [ $6,000 × 1.05⁻² ] + [ $4000 × 1.05⁻³ ] + [ $2000 × 1.05⁻⁴ ]
= $5,442.177 + $3,455.35 + $1,645.405
= $10,542.932
