A publisher is deciding whether or not to invest in a new printer.The printer would cost $900,and would increase the cash flows in year 1 by $500 and in year 3 by $800.Cash flows do not change in year 2.If the interest rate is 12%,what is the present value of the cash flows from the investment?
A)$155.59
B)$1015.85
C)$1076.56
D)$346.78

Question

​A publisher is deciding whether or not to invest in a new printer.The printer would cost $900,and would increase the cash flows in year 1 by $500 and in year 3 by $800.Cash flows do not change in year 2.If the interest rate is 12%,what is the present value of the cash flows from the investment?
A)​$155.59
B)$1015.85
C)$1076.56
D)​$346.78

Quizplus · Accepted Answer

The present value of the cash flows is $1015.85. This is calculated by taking the sum of the present values of the cash flows in each year, which are $500/(1.12^1) + $0/(1.12^2) + $800/(1.12^3) = $1015.85.

​A Publisher Is Deciding Whether or Not to Invest in a New

A Publisher Is Deciding Whether or Not to Invest in a New