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Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow 1...

Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $800 2 1,010 3 1,340 4 1,170 Required: (a) If the discount rate is 11 percent, what is the present value of these cash flows? (b) What is the present value at 17 percent? (c) What is the present value at 26 percent?

Solutions

Expert Solution

Solution :

(a) The present value of the cash flows at a discount rate of 11 percent = $ 3,290.97

(b) The present value of the cash flows at a discount rate of 17 percent = $  2,882.61

(c) The present value of the cash flows at a discount rate of 26 percent = $ 2,405.17

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.


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