6-Rates of Return&Discounted; Cash Flow Question 9 (of 12) value: 6.00 points fl

ID: 2391147 • Letter: 6

Question

6-Rates of Return&Discounted; Cash Flow Question 9 (of 12) value: 6.00 points flows, to Your mother wants to encourage you to complete college, so she promises you the following cash be paid at the end of each year after you graduate Year Cash Flow $ 760 840 1,430 What is the present value of the cash flows upon graduation? Assume that the appropriate discount rate is 10 percent annually with quarterly your final answer to 2 decimal places, e.g., 32.16.) compounding (Do not round intermediate calculations and round Present value References eBook & Resources Worksheet Difficulty Basic

Explanation / Answer

PRESENT VALUE = $ 2,361.83

Year

Annual Cash flows

Present Value Factor at 10%

Present Value of Annual Cash flows

760.00

0.909090909

690.91

840.00

0.826446281

694.21

0.00

0.751314801

1430.00

0.683013455

976.71

TOTAL PRESENT VALUE

$ 2,361.83