Huggins Co. has identified an investment project with the following cash flows.
ID: 2613475 • Letter: H
Question
Huggins Co. has identified an investment project with the following cash flows.
If the discount rate is 11 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the present value at 20 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the present value at 30 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Present value
Year Cash Flow 1 $ 910 2 1,310 3 1,570 4 1,750Explanation / Answer
Calculation of Present Value Present Value = PVAF(life, rate) Present Value = 910/(1+.11)+1310/(1+.11)2+1570/(1+.11)3+1750/(1+.11)4 Present Value = 910*.901+1310*.812+1570*.731+1750*.658 Present Value = 819.91+1063.72+1147.67+1151.5 Present Value = $ 4182.80 Now at 20% Present Value = 910/(1+.2)+1310/(1+.2)2+1570/(1+.2)3+1750/(1+.2)4 Present Value = 910*.833+1310*.695+1570*.578+1750*.482 Present Value = $ 758.03+910.45+907.46+843.50 Present Value = $ 3419.44 At 30% Present Value = * 910*.769+ 1310*.592+1570*.455+1750*.379 Present Value = $ 700+775.52+714.35+663.25 Present Value = $ 2853.12
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