DEE 2.00 points Eulis Co. has identified an investment project with the followin

Question

DEE 2.00 points Eulis Co. has identified an investment project with the following cash flows. $1,030 850 1,460 1,820 If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate ca answer to 2 decimal places, e.g., 32.16.) Present value What is the present value at 18 percent? (Do not round intermediate calculations and round your answer to 2 c Present value What is the present value at 24 percent? (Do not round intermediate calculations and round your answer to 2 d Present value Hints eBook & Resources

Explanation / Answer

Solution -

Present value of cash flows - cash flows ( PVF, rate, period)

Present value of cash flows if discount rate is 10%

$1030*0.9091+$850*0.8264+$1460*0.7513+$1820*0.6830= $3,978.77

Present value of cash flows if discount rate is 18%

$1030*0.8475+ $850*0.7182+$1460*0.6086+$1820*0.5158=$3310.71

Present Value of cash flows if discount rate is 24%

$1030*0.8065+$850*0.6504+$1460*0.5245+$1820*0.4230= $2919.17

Answer 2:

Solution: Amount = - $ 200 Time Period (n)= 24 years Rate of Return (r)= 10.60% Calculate the future value if the payment is made at the beginning of the period: Future Value = Amount * [(1+r)^n - 1)/r] Future Value = 200 * [(1+0.008833)^288 - 1)/0.008833] Future Value = 200* [(12.5779478 - 1)/0.008833] Future Value = 200*(11.5779478/0.008833) Future Value = $ 2,62,394.25 Calculate the future value if the payment is made at the end of the period: Future Value = Amount * [(1+r)^n - 1)/r]*(1+r) Future Value = 200 * [(1+0.008833)^288 - 1)/0.008833] * (1+0.008833) Future Value = 200* [(12.5779478 - 1)/0.008833] *1.008833 Future Value = 200*(11.5779478/0.008833) *1.008833 Future Value = $ 2,64,712.07 Difference = Future Value of Payment made at the end of the period - Future Value of Payment made at the beginning of the period Difference = $2,64,712.07 - $2,62,394.25 = $2317.82 You will have $2317.82 at the end of 24 years Correct option is C i.e. 2317.82

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