Question

CNP, Inc. is considering a project that will produce cash inflows of $12,000 in year one, $27,600 in year two, and $48,100 in year three. What is the present value of these cash inflows if the company assigns the project a discount rate of 10.5 percent?
a. $69,113.58
b. $64,999.91
c. $76,370.51d. $58,372.13
e. $71,824.90

Answer 1

Answer:

a. $69,113.58

Explanation:

Present value can be found by discounting the cash flows at the discount rate.

Present value can be calculated using a financial calculator:

cash flow for year 1 = $12,000

cash flow for year 2 = $27,600

cash flow for year 3=$48,100

Discount rate = 10.5%

Present value = $69,113.58

I hope my answer helps you