What is the value on 1/1/14 of the following cash flows? Use a 10% discount rate,and round your answer to the nearest $1.00.
Date Cash Received Amount of Cash
1/1/16 $100
1/1/17 $200
1/1/18 $300
1/1/19 $400
1/1/20 $500
A)$1,500
B)$880
C)$968
D)$1,065

Question

Quizplus · Accepted Answer

To find the value of the cash flows, we need to discount each cash flow back to 1/1/14 and then add them up. Using a 10% discount rate, we have:

1/1/16: $90.91 
1/1/17: $165.29 
1/1/18: $225.79 
1/1/19: $273.30 
1/1/20: $305.76

Adding these up gives us a total value of $968.05, which rounds to $968. Therefore, the best choice is C.

What Is the Value on 1/1/14 of the Following Cash