Question

Fox Co. has identified an investment project with the following cash flows.

Year	Cash Flow
1		$	1,230
2			1,150
3			1,560
4			1,920

a.	If the discount rate is 11 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	What is the present value at 16 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.	What is the present value at 22 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
	a. Present value at 11%? b. Present value at 16%? c. Present value at 22%? Please also show one answer on a financial calculator if possible.

Answer 1

a )Present value = sum of cash flows discounted @ discount rate

Present value = 1230 / 1.1 + 1150 / 1.1^2 + 1560 / 1.1^3 + 1920 / 1.1^4

Cash flows	Discounting Factor @11% [1/( 1+r)^n]	Present value
1230	0.900900901	1108.108108
1150	0.811622433	933.3657982
1560	0.731191381	1140.658555
1920	0.658730974	1264.763470
Total Present value	4446.895932

Present value = $ 4,446.90

b)

Cash flows	Discounting Factor @11% [1/( 1+r)^n]	Present value
1230	0.862068966	1060.344828
1150	0.743162901	854.6373365
1560	0.640657674	999.4259707
1920	0.552291098	1060.398908
Total Present value	3974.807043

Total Present value = $3,974.81

c)

Cash flows	Discounting Factor @11% [1/( 1+r)^n]	Present value
1230	0.819672131	1008.196721
1150	0.671862403	772.641763
1560	0.550706887	859.1027443
1920	0.451399088	866.686249
Total Present value	3506.627478

Total Present value = $3,506.63