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XKL Co. plans a new project that will generate $135018 of continuous cash flow each year...

XKL Co. plans a new project that will generate $135018 of continuous cash flow each year for 9 years and additionally $102141 at the end of the project. If the continuously compounded rate of interest is 3.06%, estimate the present value of the cash flows.( Use formula Step-by-Step, NOT excel)

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Answer #1
First we will find the Present value of annuity cashflows of $ 135,018 for each year for 9 years
Present value annuity factor for 9 years at 3.06%
Present value annuity factor is = 7.764369
Present value of annuity cashflows is = (135018*7.764369168)
Present value of annuity cashflows is = $ 1,048,330.
Now we will find the Present value of terminal cashflows = (102141*PVF(3.06%,9 yrs)
Present value of terminal cashflows = (102141*0.76241)
Present value of terminal cashflows = $ 77,873.35/.
Estimated present value of the cash flows is = (1048330+77873)
Estimated present value of the cash flows is = $ 1,126,203/.
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