You are considering a project with projected annual cash flows of $32,200,$41,800,and $22,900 for the next three years,respectively.What is the present value of these cash flows at a discount rate of 14 percent?
A)$86,487.47
B)$75,866.20
C)$77,103.18
D)$81,292.25
E)$66,549.30

Question

Quizplus · Accepted Answer

To calculate the present value of the cash flows, we need to 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 given values, we get: 
PV = 32,200/(1+0.14)^1 + 41,800/(1+0.14)^2 + 22,900/(1+0.14)^3 
PV = 28,245.61 + 30,614.62 + 16,005.97 
PV = $75,866.20

Therefore, the correct answer is B.

You Are Considering a Project with Projected Annual Cash Flows