Question

Eulis Co. has identified an investment project with the following cash flows. YearCash Flow 1 $1,130 2 1,000 3 1,510 4 1,870 If the discount rate is 9 percent, what is the present value of these cash flows

Answer 1

Answer:

Total present value= $4,369.14

Explanation:

Giving the following information:

Year Cash Flow

1 $1,130

2 $1,000

3 $1,510

4 $1,870

Discount rate= 9%

To calculate the present value, we need to use the following formula on each cash flow:

PV= Cf/(1+i)^n

PV1= 1,130/1.09= 1,036.70

PV2= 1,000/1.09^2= 841.68

PV3= 1,510/1.09^3= 1,166

PV4= 1,870/1.09^4= 1,324.76

Total present value= $4,369.14