The appropriate discount rate for the following cash flows is 9 percent compounded quarterly.

year cash flow 1 $ 815 2 990 3 0 4 1,520

what is the present value of the cash flows?

Present value of the cash flow are 2,658 dollars.

Explanation:

We can get the present value by simply multiplying the yearly dicount rate with yearly cash flows.

The discount factor of year 1 = (1+9%)^-1 = 0.197          -A

So PV of years 1 cash flow = A*815 = 748

The discount factor of year 1 = (1+9%)^-2 =  0.842         -B

So PV of years 1 cash flow = A*990 = 833

The discount factor of year 1 = (1+9%)^-3 = 0.772           -C

So PV of years 1 cash flow = A*0 = 0

The discount factor of year 1 = (1+9%)^-4 = 0.708          -D

So PV of years 1 cash flow = A*1,529 = 1,077

By adding all above calculated cashflows PV we get 2658.

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