You are thinking of buying a miniature golf course to operate. It is expected to
ID: 2755166 • Letter: Y
Question
You are thinking of buying a miniature golf course to operate. It is expected to generate cash flows of $40,000 per year in years one through four and $50,000 per year in years five through eight. If the appropriate discount rate is 10%, what is the present value of these cash flows? Thank you for quick respond Please tell me How did you get the discount 10% chart, also I got the 40000, pv is 126794.61. How todo the 50000 part. I like todo it short cut using baii plus calculator . Won't have enough time during exam.You are thinking of buying a miniature golf course to operate. It is expected to generate cash flows of $40,000 per year in years one through four and $50,000 per year in years five through eight. If the appropriate discount rate is 10%, what is the present value of these cash flows? Thank you for quick respond Please tell me How did you get the discount 10% chart, also I got the 40000, pv is 126794.61. How todo the 50000 part. I like todo it short cut using baii plus calculator . Won't have enough time during exam.
Explanation / Answer
Details Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Cash Inflows $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 Dicount Factor @10% 1 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 PV Of cash Flows 36,363.6 33,057.9 30,052.6 27,320.5 31,046.1 28,223.7 25,657.9 23,325.4 Total PV of cash flows $ 235,048 The PV factor here =1/(1.10)^n Where n= year
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