Please calculation the Present value and cash payment reduction.
Instruction: Please show the clear calculation and interpretation.
Company A sells machinery to Company B.
Company B agrees to pay Company A $200,000 at the end of each of the next 5 years, with discount rate 7%.
Instruction :
[1] provide a clear calculation to determine the first year of Present value of cash flow
[2] provide a clear calculation for each year cash payment reduction for 5 years.
[3] please provide an explanation toward your calculation.