Huggins Co. has identified an investment project with the following cash flows.

Question

Huggins Co. has identified an investment project with the following cash flows. YearCash Flow S 790 1,070 1,330 1,450 If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round al places, e.g Present value What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value What is the present value at 25 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value

Explanation / Answer

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

1.Present value of inflows=790/1.09+1070/1.09^2+1330/1.09^3+1450/1.09^4

=$3679.59

2.Present value of inflows=790/1.17+1070/1.17^2+1330/1.17^3+1450/1.17^4

=$3061.07

3.Present value of inflows=790/1.25+1070/1.25^2+1330/1.25^3+1450/1.25^4

=$2591.68

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