Vault Company wants to purchase an asset with a 3-year useful life, which is expected to produce cash inflows of $10,000 each year for two years, and $15,000 in year 3.Vault has a 14% cost of capital, and uses the following factors.What is the present value of these future cash flows? $\text { Present Value of } 1$
$\begin{array}{lll}
\text { Period } & 14 \% \
1 & .88 \
2 & .77 \
3& .67
\end{array}$

Question

Vault Company wants to purchase an asset with a 3-year useful life, which is expected to produce cash inflows of $10,000 each year for two years, and $15,000 in year 3.Vault has a 14% cost of capital, and uses the following factors.What is the present value of these future cash flows? $\text { Present Value of } 1$
$\begin{array}{lll}
\text { Period }  & 14 \% \
1 & .88 \
2 & .77 \
 3& .67
\end{array}$

Quizplus · Accepted Answer

The present value of the future cash flows can be calculated by multiplying each cash inflow by its respective present value factor and summing them up: $10,000 \times .88 + 10,000 \times .77 + 15,000 \times .67 = 8,800 + 7,700 + 10,050 = 26,550$.

Vault Company Wants to Purchase an Asset with a 3-Year Present Value of 1\text { Present Value of } 1 Present Value of 1

Vault Company Wants to Purchase an Asset with a 3-Year $\text { Present Value of } 1$