To calculate the present value (PV) of the future cash flows at an interest rate of 8% per year, we can use the present value formula for single cash flows and annuities.
The present value formula for a single future cash flow is:
\[
PV = \frac{FV}{(1 + r)^n}
\]
Where:
- \( PV \) = Present value
- \( FV \) = Future value (cash flow received in the future)
- \( r \) = Interest rate (as a decimal)
- \( n \) = Number of years until payment is