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

Discount rate = 10%

PV10% = $820 / (1 + 10%)1 + $1,130 / (1 + 10%)2 + $1,390 / (1 + 10%)3 + %1,525 / (1 + 10%)4

= $3,765.26

Discount rate = 16%

PV16% = $820 / (1 + 16%)1 + $1,130 / (1 + 16%)2 + $1,390 / (1 + 16%)3 + %1,525 / (1 + 16%)4

= $3,279.43

Discount rate = 25%

PV25% = $820 / (1 + 25%)1 + $1,130 / (1 + 25%)2 + $1,390 / (1 + 25%)3 + %1,525 / (1 + 25%)4

= $2,715.52

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