Question

You are considering a project which will provide annual cash inflows of $4,921, $5,700, and $8,000 at the end of each year for the next three years, respectively. What is the present value of these cash flows, given a 9 percent discount rate?

Answer 1

Total PV= $15,489.73

Step-by-step explanation:

Giving the following information:

Cash flows:

1= $4,921

2= $5,700

3= $8,000

Interest rate= 9%

To calculate the present value, we need to use the following formula on each cash flow:

PV= FV/(1+i)^n

PV1= = 4,921/1.09= 4,514.68

PV2= 5,700/1.09^2= 4,797.58

PV3= 8,000/1.09^3= 6,177.47

Total PV= $15,489.73