Question

In: Finance

Glendora Ridge Company has a project opportunity that requires $576.32 initial investment (cash outflows) today and...

Glendora Ridge Company has a project opportunity that requires $576.32 initial investment (cash outflows) today and this project is expected to generate cash inflows of $150 in year 1, $175 in year 2, $200 in year 3, and $X in year 4. If the project rate of return is 8%, calculate the project cash inflow in year 4 (calculate what is $X)?

Solutions

Expert Solution

rate positively ..

Year Cash flow PVIF @ 8% Present value
0 -576.32 $               1.0000        (576.32)
1 150 $               0.9259          138.89
2 175 $               0.8573          150.03
3 200 $               0.7938          158.77
4 x $               0.7350 0.7350*x
Therefore we have below equation
0.7350*x= 128.6303694
x= $               175.00
Ans= $               175.00

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