Present and future value tables of $1 at 3% are presented below:

-At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the (rounded) cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?
A) $41,556.
B) $39,982.
C) $32,400.
D) $38,100.

Question

Present and future value tables of $1 at 3% are presented below:

-At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the (rounded) cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?
A) $41,556. 
B) $39,982. 
C) $32,400. 
D) $38,100.

Quizplus · Accepted Answer

($8,000 × 0.97087) + ($12,000 × 0.94260) + ($10,000 × 0.91514) + ($15,000 × 0.88849) = $7,767 + 11,311 + 9,151 + 13,327 = $41,556

Present and Future Value Tables of $1 at 3% Are