16. You have just purchased an investment that generates the following cash flow

Question

16. You have just purchased an investment that generates the following cash flows for the next four years. You are able to reinvest these cash flows at 3.65 perecent, compounded annually. How much is this investment worth today?

End of year
1.$2,042
2.$443
3.$4,257
4.$4,837

What is the present value of this investment if 3.65 perecent per year is the appropriate discount rate?
Round the answer to two decimal places.

17. You have been offered the opportunity to invest in a project that will pay $3,855 per year at the end of years one through three and $10,206 per year at the end of years four and five. IF the appropriate discount rate is 12.74 perecent per year, what is the present value of this cash flow patttern?
Round the answer to two decimal places.

Explanation / Answer

16 Particulars Time PVF Amount PV Cash Flows 1 0.964785335 2042      1,970.09 2 0.930810743 443          412.35 3 0.898032555 4257      3,822.92 4 0.86640864 4837      4,190.82 PV of Cahs Flows    10,396.18 17 Particulars Time PVF Amount PV Cash Flows 1-3 2.372 3855      9,144.06 4-5 1.168 10206    11,920.61 PV of Cahs Flows    21,064.67

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