Present Value of Uneven Cash Flows

Jane is evaluating an investment that will provide the following cash flows at the end of each year for the next four years:

- Year 1: $1,000

- Year 2: $1,500

- Year 3: $2,000

- Year 4: $2,500

If Jane's required rate of return is 8%, what is the present value (PV) of these cash flows?

To calculate the present value of uneven cash flows, use the formula:

$$ PV = rac{C_1}{(1 + r)^1} + rac{C_2}{(1 + r)^2} + rac{C_3}{(1 + r)^3} + rac{C_4}{(1 + r)^4} $$

Where:

• $C_t$ = cash inflow during period $t$
• $r$ = discount rate