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16 March, 23:31

What is the present value of following streams of future cash flows if the discount rate is 11%?

Year 1: $10,000

Year 2: $11,000

Year 3: $13,000

a. $35,847

b. $27,949

c. $33,521

d. $29,067

e. None of the above

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Answers (1)
  1. 16 March, 23:48
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    b. $27,949

    Explanation:

    The computation of the present value is presented below

    Year Amount DF factor @ 11% Present value

    1 $10,000 0.90909 $9,090.91

    2 $11,000 0.82645 $9,090.85

    3 $13,000 0.75131 $9,767.03

    Total $27,948.79
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