If the discount rate is 10 percent, what is the present value of these cash flow

Question

If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the present value at 16 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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.)

Explanation / Answer

Dear Friend , Present value of any cash flow can be calculated by multiplying the Cash inflow amount with Discount factor for the year. Discount Factor Can be calculated by formula 1/(1+r)n where r = Discount Rate and n = no. of year. i.e., I year disc rate @ 10% = 1/(1+0.1)1 = 0.909091, II year = 1/(1+0.1)2 = 0.826446 and so on... 1. Accordingly, Present Value of Given Project @ Discount rate 10% Year Cash Inflow Disc Factor Present Value 1 820 0.909091 745.4545 2 1130 0.826446 933.8843 3 1390 0.751315 1044.328 4 1525 0.683013 1041.596 Present Value 3765.26 $ 2. Accordingly, Present Value of Given Project @ Discount rate 16% Year Cash Inflow Disc Factor Present Value 1 820 0.862069 706.8966 2 1130 0.743163 839.7741 3 1390 0.640658 890.5142 4 1525 0.552291 842.2439 Present Value 3279.43 $ 3. Accordingly, Present Value of Given Project @ Discount rate 25% Year Cash Inflow Disc Factor Present Value 1 820 0.8 656 2 1130 0.64 723.2 3 1390 0.512 711.68 4 1525 0.4096 624.64 Present Value 2715.52 $

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