Question

Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 850 2 1,190 3 1,450 4 1,600 If the discount rate is 7 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Answer 1

Answer:

 $4,238.05  

Explanation:

The computation of the present value is shown below:

Years  Cash flows   Discount factor @7%         Present value

1           $850.00  0.9345794393              $794.39  

2          $1,190.00  0.8734387283              $1,039.39  

3           $1,450.00  0.8162978769              $1,183.63  

4           $1,600.00  0.762895212              $1,220.63  

Total present value                               $4,238.05