Question

McCann Co. has identified an investment project with the following cash flows.

Year	Cash Flow
1	$750
2	1,010
3	1,260
4	1,190

a.	If the discount rate is 9 percent, what is the present value of these cash flows?

b.	What is the present value at 17 percent?

c.	What is the present value at 27 percent?

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Answer 1

year	cash flows	discount @ 9%	discount @17%	discount 27%	pv at 9%	pv @17%	pv@27%
1	750	0.9174311927	0.8547008547	0.7874015748	688.0733945	641.025641	590.5511811
2	1010	0.8416799933	0.7841292245	0.7223867659	850.0967932	791.9705167	729.6106335
3	1260	0.7721834801	0.7193846096	0.6627401522	972.9511849	906.4246081	835.0525917
4	1190	0.7084252111	0.6599858804	0.6080184882	843.0260012	785.3831977	723.542001
			pv of cashflows		3354.147374	3124.803964	2878.756407

pv of cash flows @ 9% = 3354

pv of cash flows @17%= 3124

pv of cash flows @ 27%= 2879