If the discount rate is 9 percent, what is the present value of these cash flows

Question

If the discount rate is 9 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 20 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the present value at 30 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

At discount rate of 9% NPV = CF1/( 1+i)1 + CF2/(1+i)2 + CF3 /(1+i)3 + CF4 /(1+i)4           = 890/(1+0.09) + 1270 /(1+0.09)2 + 1530 /(1+0.09)3 + 1700 /(1.09)4            = 890 /1.09 + 1270 / 1.1881 + 1530 / 1.2950 + 1700 / 1.4116            = 816.5138 + 1068.934 + 1181.467 + 1204.307            = 4271.22 At dis count rate of 20% NPV = CF1/( 1+i)1 + CF2/(1+i)2 + CF3 /(1+i)3 + CF4 /(1+i)4           = 890/(1+0.20) + 1270 /(1+0.20)2 + 1530 /(1+0.20)3 + 1700 /(1+0.20)4            = 890 /1.20 + 1270 / 1.44 + 1530 / 1.728 + 1700 / 2.0736            = 741.6667 + 881.9444 + 885.4167 + 819.8302            = 3328.86 At dis count rate of 30% NPV = CF1/( 1+i)1 + CF2/(1+i)2 + CF3 /(1+i)3 + CF4 /(1+i)4           = 890/(1+0.30) + 1270 /(1+0.30)2 + 1530 /(1+0.30)3 + 1700 /(1+0.30)4            = 890 /1.30 + 1270 / 1.69 + 1530 /2.197 + 1700 / 2.8561            = 741.6667 + 881.9444 + 885.4167 + 819.8302            = 2727.72

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