Final answer:
The present value of future cash flows of $39,000 in one year, $54,000 in two years, and $49,000 in three years, at a cost of capital of 12%, is $112,739.76.
Step-by-step explanation:
To calculate the present value of future cash flows given a cost of capital of 12%, we use the formula:
Present Value (PV) = Future Cash Flow / (1 + r)^n
where 'r' represents the discount rate (in this case, 12% or 0.12), and 'n' is the number of periods until the payment is received.
For $39,000 paid one year from today:
PV = $39,000 / (1 + 0.12)1
For $54,000 paid two years from today:
PV = $54,000 / (1 + 0.12)2
For $49,000 paid three years from today:
PV = $49,000 / (1 + 0.12)3
Performing the calculations:
PV (1 year) = $39,000 / 1.12 = $34,821.43
PV (2 years) = $54,000 / (1.12)2 = $43,086.19
PV (3 years) = $49,000 / (1.12)3 = $34,832.14
Adding all these present values together provides the total present value of all payments:
Total PV = $34,821.43 + $43,086.19 + $34,832.14
Total PV = $112,739.76
Therefore, the present value of all future payments, rounded to two decimal places, is $112,739.76.