Question

You are considering a project which will provide annual cash inflows of $7,500, $3,000, $9,000, and $12,430 at the end of each year for the next four years, respectively. What is the present value of these cash flows, given a 9 percent discount rate?

Answer 1

$25,161.15

Step-by-step explanation:

The computation of the present value of the cash flows is presented below:

Years Cash flows Discount factor Present value

1 $7,500.00 0.9174311927 $6,880.73

2 $3,000.00 0.8416799933 $2,525.04

3 $9,000.00 0.7721834801 $6,949.65

4 $12,430.00 0.7084252111 $8,805.73

Present value $25,161.15

The discount factor should be computed below

= 1 ÷ (1 + rate)^years