Question

Specter Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 810 2 1,110 3 1,370 4 1,500 a. If the discount rate is 11 percent, what is the present value of these cash flows

Answer 1

Answer:

3620.46

Explanation:

Use basic principles to find the present value of a cash flow

PV(1+i)ⁿ=CF

CF*(1+i)⁻ⁿ=PV

so we would have

$810(1+.11)^{-1}+1110*1.11^{-2}+1370*1.11^{-3}+1500*1.11^{-4}=$3620.459284

which rounds to 3620.46