A company anticipates a taxable cash receipt of $50,000 in year 3 of a project.The company's tax rate is 30%,and its discount rate is 14%.What is the approximate present value of this future cash flow?

Question

Quizplus · Accepted Answer

To calculate the present value of the future cash flow, we need to discount the $50,000 by the appropriate discount rate. Using the formula:

PV = FV / (1 + r)^n

where PV is the present value, FV is the future value, r is the discount rate, and n is the number of years, we can find:

PV = 50,000 / (1 + 0.14)^3 = $23,625

Therefore, the approximate present value of the future cash flow is $23,625. The correct answer is (C).

A Company Anticipates a Taxable Cash Receipt of $50,000 in Year