Question

Alex expects to incur personal costs of $3,800 in Year 1, and $4,300, $5,200 and $4,600 in costs over the following three years, respectively. What is the present value of these costs at 7 percent

Answer 1

$15,061.26

Step-by-step explanation:

The computation of the present value for these costs are shown below:

Year Expected cash flow Discount factor at 7% Present value

1 $3,800 0.9345794393 $3,551.40

2 $4,300 0.8734387283 $3,755.79

3 $5,200 0.8162978769 $4,244.75

4 $4,600 0.762895212 $3,509.32

Total $15,061.26

Refer to the discount factor table