Question

Specter Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 a. If the discount rate is 11 percent, what is the present value of these cash flows

Answer 1

3620.46

Step-by-step explanation:

Use basic principles to find the present value of a cash flow

PV(1+i)ⁿ=CF

CF*(1+i)⁻ⁿ=PV

so we would have

`810(1+.11)^(-1)+1110*1.11^(-2)+1370*1.11^(-3)+1500*1.11^(-4)=`3620.459284

which rounds to 3620.46