Jennifer presents a business plan to her bank's loan officer that predicts net cash flows for the first three years of $10,000,$15,000,and $8,000 respectively.If these cash flows occur at the end of each year and the discount rate is 4%,what is the total present value of these cash flows? (Round to the nearest whole dollar)

Question

Quizplus · Accepted Answer

Step 1 - Find the present value of each individual cash flow.
PV = 11ea7fdb_fc1c_7488_a768_5527a6c43411_TB2902_11 PV = 11ea7fdb_fc1c_9b99_a768_e3c4b339eaf7_TB2902_11 = $9,615.38
PV = 11ea7fdb_fc1c_9b9a_a768_eb0dc6f54f73_TB2902_11 = $13,868.34
PV = 11ea7fdb_fc1c_9b9b_a768_8de957e34f49_TB2902_11 = $7,111.97
Step 2 - Add the present value of the individual cash flows together.9,615.38 + 13,868.34 + 7,111.97 = $30,595.69Using a financial calculator:
CFo = 0, C01 = 10,000, F01 = 1, C02 = 15,000, F02 = 1, C03 = 8,000, F03 = 1, NPV I = 4, cpt NPV = $30,595.69

Jennifer Presents a Business Plan to Her Bank's Loan Officer