Answer:
Present Value of Investment Opportunity = $95,096
Explanation:
Net cash inflow = Cash inflow - cash outflow
Given that net cash inflow = $30,000 per month for 4 years
Rate of return = 10%
Present Value = [tex]\frac{1}{(1+0.1)^{1} } X $30,000 + \frac{1}{(1+0.1)^{2} } X $30,000 + \frac{1}{(1+0.1)^{3} } X $30,000 + \frac{1}{(1+0.1)^{4} } X $30,000[/tex]
= $27,272.72 +$24,793.38 + $22,539.44 + $20,490.40
= $95,096 (rounded off to nearest dollar)
Present Value of Investment Opportunity = $95,096
