Question

An investment is expected to produce annual cash flows $8,000 every year for 5 years. Assuming...

An investment is expected to produce annual cash flows $8,000 every year for 5 years. Assuming a discount rate of 8%, the present value of this series of cash flows is _____. (Round your answer to two decimal places.)

Period 1 2 3 4 5
8% 0.92593 0.85734 0.79383 0.73503 0.68058

a.$31,941.68

b.$39,852.23

c.$32,857.53

d.$29,866.67

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Answer #1

Correct answer-----------a.$31,941.68

Working

Year Cash flows (A) PV factor @ 8% (B) Present value (A x B)
1 $    8,000.00 0.92593 $    7,407.44
2 $    8,000.00 0.85734 $    6,858.72
3 $    8,000.00 0.79383 $    6,350.64
5 $    8,000.00 0.73503 $    5,880.24
4 $    8,000.00 0.68058 $    5,444.64
Present value of cash flows $ 31,941.68
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