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24 August, 23:38

Fox Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,150 2 1,030 3 1,520 4 1,880 a. If the discount rate is 11 percent, what is the present value of these cash flows

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  1. 25 August, 02:06
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    The answer is $4,221.77

    Explanation:

    Present value = Cash flow / (1+r) ^n

    where n is the number of years

    Cash flow 1:

    $1,150/1.11^1

    =$1,036

    Cash flow 2:

    $1,030/1.11^2

    =$835.97

    Cash flow 3:

    $1,520/1.11^3

    =$1,111.41

    Cash flow 4::

    $1,880/1.11^4

    =$1,238.39

    Present Value of all the cash flows is

    $1,036 + $835.97 + $1,111.41 + $1,238.39

    =$4,221.77
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