Nutech Corp. is expecting the following cash flows-$79,000, $112,000, $164,000, $84,000, and $242,000-over the next five years. If the company's opportunity cost of capital is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The correct answer is A because the present value of the cash flows is $429,560. This can be calculated using the formula:PV = CF1 / (1 + r) + CF2 / (1 + r)^2 + CF3 / (1 + r)^3 + CF4 / (1 + r)^4 + CF5 / (1 + r)^5where:PV is the present valueCF1 is the cash flow in year 1r is the opportunity cost of capitalCF2 is the cash flow in year 2CF3 is the cash flow in year 3CF4 is the cash flow in year 4CF5 is the cash flow in year 5Plugging in the values from the question, we get:PV = -79,000 / (1 + 0.15) + 112,000 / (1 + 0.15)^2 + 164,000 / (1 + 0.15)^3 + 84,000 / (1 + 0.15)^4 + 242,000 / (1 + 0.15)^5PV = $429,560