Question

Annual cash inflows that will arise from two competing investment projects are given below: Year Investment A Investment B 1 $ 5,000 $8,000 2 6,000 7,000 3 7,000 6,000 4 8,000 5,000 Total $26,000 $26,000 The discount rate is 9%. Use Excel or a financial calculator to solve the homework. Round answers to the nearest dollar. Required: Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment

Answer 1

Explanation:

Since the cash flows are given in the question for the Investment A and the Investment B

So, the present value could be find out by multiplying the each year cash inflows with its discounted factor i.e 9%

So that the present value could come

The discount factor should be computed by

= 1 ÷ (1 + rate) ^ years

The attachment is shown below: