You are considering a project with cash flows of $16,500, $25,700, and $18,000 at the end of each year for the next three years, respectively. What is the present value of these cash flows, given a discount rate of 7.9 percent?

Question

Quizplus · Accepted Answer

To find the present value of these cash flows, you can use the formula:
PV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + CF3 / (1 + r)^3
Plugging in the values, we get:
PV = 16,500 / (1 + 0.079)^1 + 25,700 / (1 + 0.079)^2 + 18,000 / (1 + 0.079)^3
PV = 15,336.71 + 22,052.83 + 14,305.61
PV = 51,695.15
Therefore, the present value of the cash flows is $51,695.15. Choice B is the best choice.

You Are Considering a Project with Cash Flows of $16,500