If the discount rate is 10 percent, what is the present value of these cash flow
ID: 2617329 • Letter: I
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.)
Huggins Co. has identified an investment project with the following cash flows.Explanation / Answer
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
1.Present value=820/1.1+1130/1.1^2+1390/1.1^3+1525/1.1^4
=$3765.26(Approx)
2.Present value=820/1.16+1130/1.16^2+1390/1.16^3+1525/1.16^4
=$3279.43(Approx)
3.Present value=820/1.25+1130/1.25^2+1390/1.25^3+1525/1.25^4
=$2715.52(Approx)
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