1. Rooster Co. has identified an investment project with the following cash flow
ID: 2638479 • Letter: 1
Question
1. Rooster Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $1,210 2 1,120 3 1,550 4 1,910 Requirement 1: If the discount rate is 9 percent. what is the present value of these cash flows? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $ Requirement 2: What is the present value at 17 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $ Requirement 3: What is the present value at 23 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $Explanation / Answer
Req 1 Discount rate 9%
We need to discount the cash flows at 9%
PV = $1,210/(1.09)^1 + $1,120/1.09^2 + 1,550/1.09^3 + 1,910/1.09^4
PV = $4,602.75
Req 2 Present value at 17%
PV = $1,210/(1.17)^1 + $1,120/1.17^2 + 1,550/1.17^3 + 1,910/1.17^4
PV = $3,839.41
REq 3 PV at 23%
PV = $1,210/(1.23)^1 + $1,120/1.23^2 + 1,550/1.23^3 + 1,910/1.23^4
PV = $ 3,391.5
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