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You have been offered the opportunity to invest in a project which is exected to provide...

You have been offered the opportunity to invest in a project which is exected to provide you with the following cash flows: $4,000 in 1 year, $12,000 in 2 years, and $8,000 in 3 years. If the appropriate interest rates are 6 percent for the first year, 8 percent for the second year, and 12 percent for the third year, what is the present value of these cash flows?

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Answer #1

Ans $ 19755.89

Year Project Cash Flows (i) DF DF(ii) PV of Project ( (i) * (ii) )
1 4000 1/((1+6%)^1) 0.943                        3,773.58
2 12000 1/((1+8%)^2) 0.857                     10,288.07
3 8000 1/((1+12%)^3) 0.712                        5,694.24
PV                     19,755.89
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