You are considering a project with the following cash flows: $\begin{array}{|l|l|l|}
\hline \text { Year 1 } & {Year2} & \text { Year } 3 \
& & \
\hline £ 1,200 & £ 1,800 & £ 2,900 \
\hline
\end{array}$ What is the present value of these cash flows,given a 9% discount rate?

Question

Quizplus · Accepted Answer

To calculate the present value of the cash flows, we can use the formula PV = CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3, where CF is the cash flow and r is the discount rate. Plugging in the values, we get PV = 1200/(1+0.09)^1 + 1800/(1+0.09)^2 + 2900/(1+0.09)^3 = £4,855.27, which is closest to option B (£4,855.27). Therefore, B is the correct choice.

You Are Considering a Project with the Following Cash Flows Year 1 Year2 Year 3£1,200£1,800£2,900\begin{array}{|l|l|l|}\hline \text { Year 1 } & {Year2} & \text { Year } 3 \\& & \\\hline £ 1,200 & £ 1,800 & £ 2,900 \\\hline\end{array} Year 1 £1,200​Year2£1,800​ Year 3£2,900​​

You Are Considering a Project with the Following Cash Flows $\begin{array}{|l|l|l|}\hline \text { Year 1 } & {Year2} & \text { Year } 3 \\& & \\\hline £ 1,200 & £ 1,800 & £ 2,900 \\\hline\end{array}$