Use the following table for questions .
-A company has a minimum required rate of return of 10% and is considering investing in a project that requires an investment of $68,000 and is expected to generate cash inflows of $30,000 at the end of each year for 3 years.The present value of future cash inflows for this project is

Question

Use the following table for questions . 
-A company has a minimum required rate of return of 10% and is considering investing in a project that requires an investment of $68,000 and is expected to generate cash inflows of $30,000 at the end of each year for 3 years.The present value of future cash inflows for this project is

Quizplus · Accepted Answer

To calculate the present value of future cash inflows for this project, we can use the formula PV = CF/(1+r)^n, where CF is the cash flow, r is the required rate of return, and n is the number of periods. Using this formula, we get: 
PV(year 1) = 30,000/(1+0.1)^1 = 27,273. 
PV(year 2) = 30,000/(1+0.1)^2 = 24,793. 
PV(year 3) = 30,000/(1+0.1)^3 = 22,539. 
Total PV = 27,273 + 24,793 + 22,539 = 74,610. Therefore, the present value of future cash inflows for this project is $74,610, which is higher than the required investment of $68,000. Thus, investing in this project is the best choice.

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