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Present Value and Multiple Cash Flows. Rooster Co. has identified an investment project with
the following cash flows. If the discount rate is 10 percent, what is the present value of these
cash flows? What is the present value at 18 percent? At 24 percent?
Year Cash Flow
1 $ 830
2 610
3 1,140
4 1,390
Present Value and Multiple Cash Flows. Rooster Co. has identified an investment project with
the following cash flows. If the discount rate is 10 percent, what is the present value of these
cash flows? What is the present value at 18 percent? At 24 percent?
Solution
At 10%:
The present value of cash flows are $3,064.57 or $3,065.
At 18%:
The present value of cash flows are $2,552.26 or $2,552.
At 24%:
The present value of cash flows are $2,251.93 or $2,252.
Year
Cash flows ($)
(a)
Present value factor at 10% (1/1.10=)
(b)
Present value of cash flows
(a*b)
0 0 1 0
1 830 0.909090909 754.5454545
2 610 0.826446281 504.1322314
3 1,140 0.751314801 856.498873
4 1,390 0.683013455 949.388703
Present value of cash flows 3064.565262

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Present Value and Multiple Cash Flows- Rooster Co- has identified an i.docx

  • 1. Present Value and Multiple Cash Flows. Rooster Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? Year Cash Flow 1 $ 830 2 610 3 1,140 4 1,390 Present Value and Multiple Cash Flows. Rooster Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? Solution At 10%: The present value of cash flows are $3,064.57 or $3,065. At 18%: The present value of cash flows are $2,552.26 or $2,552. At 24%: The present value of cash flows are $2,251.93 or $2,252. Year Cash flows ($) (a) Present value factor at 10% (1/1.10=) (b) Present value of cash flows (a*b) 0 0 1 0 1 830 0.909090909 754.5454545 2 610 0.826446281 504.1322314 3 1,140 0.751314801 856.498873 4 1,390 0.683013455 949.388703
  • 2. Present value of cash flows 3064.565262