Question

Capstone Investments is considering a project that will produce cash inflows of $11,000 in year 1, $24,000 in year 2, and $36,000 in year 3. What is the present value of these cash inflows if the company assigns the project a discount rate of 12 percent?

Answer 1

Total= $54,578.17

Step-by-step explanation:

Giving the following information:

Capstone Investments is considering a project that will produce cash inflows of $11,000 in year 1, $24,000 in year 2, and $36,000 in year 3.

To calculate the present value, we need to use the following formula:

PV= FV/(1+i)^n

Year 1= 11,000/1.12= 9,821.43

Year 2= 24,000/1.12^2= 19,132.65

Year 3= 36,000/1.12^3= 25,624.09

Total= $54,578.17