You have been offered the opportunity to invest in a project that will pay $3785

Question

You have been offered the opportunity to invest in a project that will pay $3785 per year at the end of years one through three and $11094 per year at the end of years four and five. If the appropriate discount rate is 7.68 percent per year, what is the present value of this cash flow pattern?

You have been offered the opportunity to invest in a project that will pay $3785 per year at the end of years one through three and $11094 per year at the end of years four and five. If the appropriate discount rate is 7.68 percent per year, what is the present value of this cash flow pattern?

Explanation / Answer

Year cashflows PV factor at 7.68% PV 1 3785 0.92868 3515 2 3785 0.86244 3264 3 3785 0.80093 3032 4 11094 0.74381 8252 5 11094 0.69076 7663 Total Present Value 25726

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