Question

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

Year	Cash Flow
1	$950
2	1,060
3	1,340
4	1,200

(a) If the discount rate is 11 percent, what is the present value of these cash flows?
(b) What is the present value at 19 percent?

(c)	What is the present value at 29 percent?

Answer 1

a)
Statement showing Cash flows
Particulars	Time	PVf 11%	Amount	PV
Cash flows	1.00	0.9009	950.00	855.86
Cash flows	2.00	0.8116	1,060.00	860.32
Cash flows	3.00	0.7312	1,340.00	979.80
Cash flows	4.00	0.6587	1,200.00	790.48
PV of Cash flows				3,486.45
b)
Statement showing Cash flows
Particulars	Time	PVf 19%	Amount	PV
Cash flows	1.00	0.8403	950.00	798.32
Cash flows	2.00	0.7062	1,060.00	748.53
Cash flows	3.00	0.5934	1,340.00	795.18
Cash flows	4.00	0.4987	1,200.00	598.40
PV of Cash flows				2,940.43
c)
Statement showing Cash flows
Particulars	Time	PVf 29%	Amount	PV
Cash flows	1.00	0.7752	950.00	736.43
Cash flows	2.00	0.6009	1,060.00	636.98
Cash flows	3.00	0.4658	1,340.00	624.22
Cash flows	4.00	0.3611	1,200.00	433.33
PV of Cash flows				2,430.97