Determine the present value of the following cash flows discounted at an annual

Question

Determine the present value of the following cash flows discounted at an annual rate of 10%:
(a) $96,000 to be received five years from today (the present value of $1 at a 10% compound interest rate for five years is 0.621): $___________
(b) $37,000 to be received annually for five years (the present value of $1 at 10% received annually for five years is 3.791): $___________
(c) $58,000 to be received annually for six years, with an additional $16,000 salvage value to be received at the end of the sixth year (the present value of $1 at 10% received annually for six years is 4.355, and the present value of $1 due six years hence at 10% is 0.564): $___________

Explanation / Answer

a. present value=96000*0.621=59616

b. Present value=37000*3.791=140267

c. present value=58000*4.355+16000*0.564=252590+9024=261614

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