What is the value on 1/1/13 of the following cash flows:

Use a 7% discount rate,and round your answer to the nearest $10.
A) $153,270
B) $128,490
C) $112,350
D) $107,330

Question

What is the value on 1/1/13 of the following cash flows:

Use a 7% discount rate,and round your answer to the nearest $10.
A) $153,270 
B) $128,490 
C) $112,350 
D) $107,330

Quizplus · Accepted Answer

The present value of each cash flow can be calculated using the formula PV=C/(1+r)^t, where PV is the present value, C is the cash flow, r is the discount rate, and t is the number of periods. 
Calculating the present value of each cash flow and summing them up, we get the answer as $128,490, which is closest to option B. Hence, the best choice is B.

What Is the Value on 1/1/13 of the Following Cash