Question

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

Rooster Co. has identified an investment project with the following cash flows. Year Cash Flow 1 \$ 970 2 760 3 1,430 4 1,790 Requirement 1: If the discount rate is 9 percent, what is the present value of these cash flows? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value \$ Requirement 2: What is the present value at 17 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value \$ Requirement 3: What is the present value at 23 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value \$

1)

Present value of cash flows = 970 / (1 + 0.09)1 + 760 / (1 + 0.09)2 + 1,430 / (1 + 0.09)3 + 1,790 / (1 + 0.09)4

Present value of cash flows = 889.90826 + 639.6768 + 1,104.22238 + 1,268.08113

Present value of cash flows = \$3,901.89

2)

Present value of cash flows = 970 / (1 + 0.17)1 + 760 / (1 + 0.17)2 + 1,430 / (1 + 0.17)3 + 1,790 / (1 + 0.17)4

Present value of cash flows = 829.05983 + 555.1903 + 892.8499 + 955.23359

Present value of cash flows = \$3,232.33

3)

Present value of cash flows = 970 / (1 + 0.23)1 + 760 / (1 + 0.23)2 + 1,430 / (1 + 0.23)3 + 1,790 / (1 + 0.23)4

Present value of cash flows = 788.61789 + 502.34649 + 768.459 + 782.04652

Present value of cash flows = \$2,841.47

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