Q: Compute the present value of $1 received after 6-years, if your opportunity cost of capital is 12%.
We have to find out the current value of $1 that we will get after 6 years, where opportunity cost is given that is 12%.
- Define a function called "NPV" in python taking values of cash flow and opportunity cost.
- Use simple formula of discount cash flow.
Present_value = amount / (pow((1 + rate / 100), time))
Where:
Amount = $1
Rate = 12%
Time = 6 years
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