Question 6 - PV of an Uneven CF Stream [2 points]: Express Airlines is consideri

Question

Question 6 - PV of an Uneven CF Stream [2 points]: Express Airlines is considering the purchase of an aircraft to supplement its current fleet. In estimating the impact of adding this aircraft to the fleet, management has developed the following expected cash flows:

Year     Cash Flow

   1       - $    1,000

   2       $100,000

   3       $100,000

   4       $100,000

   5       $100,000

   6       $100,000

   7       - $300,000

If the discount rate is 10 percent, what is the present value of these estimated flows?

Explanation / Answer

Hence, the NPV is $189760.45

Year Cash Flow Present Value 1 -1000 -909.09 2 100000 82644.63 3 100000 75131.48 4 100000 68301.35 5 100000 62092.13 6 100000 56447.39 7 -300000 -153947.44 NPV 189760.45

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.