If the discount rate is 12%, what is the present value of the following cash flows:...

If the discount rate is 12%, what is the present value of the following cash flows:

Year	Cash Flow
1	$10,000
2	$11,000
3	$12,000
4	$13,000
5	$14,000
6-15	$15,000 each year

	a.	$144,618
	b.	$90, 537
	c.	$127,923
	d.	$127,197

Expert Solution

Ans b. $ 90537

Year	Project Cash Flows (i)	DF@ 12%	DF@ 12% (ii)	PV of Project ( (i) * (ii) )

1	10000	1/((1+12%)^1)	0.892857	8,929
2	11000	1/((1+12%)^2)	0.797194	8,769
3	12000	1/((1+12%)^3)	0.711780	8,541
4	13000	1/((1+12%)^4)	0.635518	8,262
5	14000	1/((1+12%)^5)	0.567427	7,944
6	15000	1/((1+12%)^6)	0.506631	7,599
7	15000	1/((1+12%)^7)	0.452349	6,785
8	15000	1/((1+12%)^8)	0.403883	6,058
9	15000	1/((1+12%)^9)	0.360610	5,409
10	15000	1/((1+12%)^10)	0.321973	4,830
11	15000	1/((1+12%)^11)	0.287476	4,312
12	15000	1/((1+12%)^12)	0.256675	3,850
13	15000	1/((1+12%)^13)	0.229174	3,438
14	15000	1/((1+12%)^14)	0.204620	3,069
15	15000	1/((1+12%)^15)	0.182696	2,740
		PV	90,537

jeff jeffy answered 2 years ago

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