Question

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

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 |

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a. If the discount rate is 11 percent, what is the present value of
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What is the present value at 28 percent?

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Year
Cash Flow
1
$750
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1,010
3
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4
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a.
If the discount rate is 9 percent, what is the present value of
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b.
What is the present value at 17 percent?
c.
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