Question

Conoly Co. has identified an investment project with the following cash flows. If the discount rate is 11 percent, the present value of these cash flows is $  . If the discount rate is 18 percent, the present value of these cash flows is $  . If the discount rate is 27 percent, the present value of these cash flows is $  . (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))

YEAR	CASH FLOW
1	$   850
2	1,080
3	1,290
4	1,120

Answer 1

Present value at 11% = $3,323.33

	Discount rate = R =	11.00%	Present Values (PV)
Year	Cash flows	Discount factor or PV factors = Df = 1/(1+R)^Year	PV of cash flows = Cash flows x Df
1	850.00	0.900901	765.7658
2	1,080.00	0.811622	876.5522
3	1,290.00	0.731191	943.2369
4	1,120.00	0.658731	737.7787
		Total of PV = NPV =	$3,323.33

Present value at 18% = $2,858.80

	Discount rate = R =	18.00%	Present Values (PV)
Year	Cash flows	Discount factor or PV factors = Df = 1/(1+R)^Year	PV of cash flows = Cash flows x Df
1	850.00	0.847458	720.3390
2	1,080.00	0.718184	775.6392
3	1,290.00	0.608631	785.1338
4	1,120.00	0.515789	577.6835
		Total of PV = NPV =	$2,858.80

Present value at 27% = $2,399.19

	Discount rate = R =	27.00%	Present Values (PV)
Year	Cash flows	Discount factor or PV factors = Df = 1/(1+R)^Year	PV of cash flows = Cash flows x Df
1	850.00	0.787402	669.2913
2	1,080.00	0.620001	669.6013
3	1,290.00	0.488190	629.7650
4	1,120.00	0.384402	430.5297
		Total of PV = NPV =	$2,399.19