Question

# Huggins Co. has identified an investment project with the following cash flows. Year Cash Flow 1...

Huggins 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

If the discount rate is 10 percent, what is the present value of these cash flows?

Present value \$ 3765,26 What is the present value at 16 percent?

Present value \$ 3279.42 What is the present value at 25 percent?

Present value \$ 2715.52

*These are my answers I want to know if I got them right for each year?

Answer 1) Present value if the discount rate is 10 percent

 Year Cash flows Present value @ 10% (discount factor) Present value of Net Cash flows 1 820 0.909 745.38 2 1130 0.826 933.38 3 1390 0.751 1043.89 4 1525 0.683 1041.575 Total Present Value of Cash Inflows 3764.23

Answer 2) Present value if the discount rate is 16 percent

 Year Cash flows Present value @ 16% (discount factor) Present value of Net Cash flows 1 820 0.862 706.90 2 1130 0.743 839.77 3 1390 0.641 890.51 4 1525 0.552 842.24 Total Present Value of Cash Inflows 3279.43

Answer 3) Present value if the discount rate is 25 percent

 Year Cash flows Present value @ 25% (discount factor) Present value of Net Cash flows 1 820 0.800 656.00 2 1130 0.640 723.20 3 1390 0.512 711.68 4 1525 0.410 624.64 Total Present Value of Cash Inflows 2715.52

#### Earn Coins

Coins can be redeemed for fabulous gifts.