# Al.Interest Rate8%FCF - 2016 FCF - 2017FCF - YearsAmounts*FCF - 2015Adjusted3,573.006,082.006,007.00Pv*(2,836.36)(5,150.03)(5,631.48)Total Pv**In millions(13,617.88)Pv=FVN/(1+1)^NPV(IN,0,FV)\$ 13,617.882014 PV of FCF=* The PV is NOT a negative number. It is a posiive number. This negative values calculated hereare a result of the PV formula only. A2.Interest Rate8%FCF - YearsFCF - 2015FCF - 2016 FCF - 201710% DecreaseAmounts*5,473.805,406.303,215.70(2,552.73)Py*(5,068.33)(4,635.03)Total Pv**In millions(12,256.09)PV(I,N,0,FV)Pv-FVN/(1+1)^NS 12,256.092014 PV of Reduced FCF =* The PV is NOT a negative number. It is a posiive number. This negative values calculated hereare a result of the PV formula only.

Question
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What are the implications of the change in present value based on risk (a decrease in FCF by 10%)? In other words, what does the change mean to the company, and how would a financial manager interpret it?

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Step 1

Present Value:

It is the current or discounted value of the future inflow and outflow. It is calculated by discounting the future inflow and outflow with the help of the specified interest rate. In excel it is calculated by using the PV functio...

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