Question

It is the 1st of July and you are asked to prepare the future value calculation...

It is the 1st of July and you are asked to prepare the future value calculation table for your client XYZ based on the information supplied on the project:

Expected annual cash flow $15,000.

Project life 10 years.

Year

Present value of $1 at 9%

1

0.9174

2

0.8417

3

0.7722

4

0.7084

5

0.6499

6

0.5963

7

0.5470

8

0.5019

9

0.4604

10

0.4224

Amount expected to be recovered from the project in the final year $7,000.

Cost of project $100,000.

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Answer #1

Initial Year:

Cost Outflow: $100,000

Cash Inflow:

1st Year: $15,000 * 0.9174 = $13,761

2nd Year: $15,000 * 0.8417 = $12,625.5

3rd Year: $15,000 * 0.7722 = $11,583

4th Year: $15,000 * 0.7084 = $10,626

5th Year: $15,000 * 0.6499 = $9,748.5

6th Year: $15,000 * 0.5963 = $8,944.5

7th Year: $15,000 * 0.5470 = $8,205

8th Year: $15,000 * 0.5019 = $7,528.5

9th Year: $15,000 * 0.4604 = $6,906

10th Year: ($15,000+$7,000) * 0.4224 = $9,292.8

Total Inflows: 99,220.8

Net Present Value: $100,000-$99,220.8 = -$779.2

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