Question

Specter Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 820 2 1,130 3 1,390 4 1,525 a. If the discount rate is 10 percent, what is the present value of these cash flows

Answer 1

Answer:

$3,765.26

Explanation:

Present value is the sum of discounted cash flows.

Present value can be calculated using a financial calculator

Cash Flow in year 1 = $ 820

Cash Flow in year 2 = 1,130

Cash Flow in year 3 = 1,390

Cash Flow in year 4 = 1,525

I = 10

PV = $3,765.26

To find the PV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you