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Assume a firm is evaluating a stream of cash flows. Today the firm incurs a cost...

Assume a firm is evaluating a stream of cash flows. Today the firm incurs a cost of $10,000, and then the firm receives $1,826 in year 1, $3,822 in year 2, and $1,456 in year 3. Assume the firm has a discount rate of 14%.  Calculate the present value of cash flows form year 1 to year 3.

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Answer #1

Ans $ 5525.42

Year Project Cash Flows (i) DF@ 14% DF@ 14% (ii) PV of Project A ( (i) * (ii) )
1 1826 1/((1+14%)^1) 0.877                       1,601.75
2 3822 1/((1+14%)^2) 0.769                       2,940.90
3 1456 1/((1+14%)^3) 0.675                           982.76
TOTAL                       5,525.42
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