Question

A climbing wall is expected to produce regular annual cash flows of 43,701 dollars with the...

A climbing wall is expected to produce regular annual cash flows of 43,701 dollars with the first regular cash flow expected later today and the last regular cash flow expected in 9 years from today. In addition to the regular cash flows of 43,701 dollars, the climbing wall is also expected to produce an extra cash flow of 53,703 dollars in 9 years from today. The cost of capital for the climbing wall is 7.18 percent. What is the value of the climbing wall?

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Answer #1
Answer:
Calculatio of value of the climbing wall:
Value of the climbing wall will equal to present value of cash inflows
Year Cash flows Present value factor @7.18% Present value
0 43701 1 43701.00
1 43701 0.9330 40773.03
2 43701 0.8705 38041.72
3 43701 0.8122 35493.95
4 43701 0.7578 33116.62
5 43701 0.7070 30896.61
6 43701 0.6597 28829.55
7 43701 0.6155 26897.97
8 43701 0.5742 25093.11
9 97404 0.5358 52189.06
Total 311331.62
So, value of climbing wall is $311,331.62 (Answer)
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