Uneven Cash Flows

• What id the cash flows are different each period

  then they aren't payments anymore
• HP calculator NPV

  CF j , I/YR , orange shift PRC
• NPV =

  net present value
• NPV

  fins the PV of the entered cash flow stream after entering the rate into I/YR
• Let’s say you sign a five-year contract with a $3 million signing bonus and annual salaries of, $2.5 million per year for the first two years, $4 million in the third year, and $5.5 million per year for the last two years. If the discount rate is 6%, what is the present value of the contract?

  $19.41 million
• CF0 = 0 , CF1 = 1.50, CF2 = 2, CF3 = 2.85, CF4 = 3.25 + 47.85

  I/YR = 12.3

  NPV = $37.06