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Seaborn Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $950            2 1,060            3 1,340            4 1,200            (a) If the discount...

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Finance

Seaborn Co. has identified an investment project with thefollowing cash flows.

YearCash Flow
1$950          
21,060          
31,340          
41,200          

(a) If the discount rate is 11 percent, what is the presentvalue of these cash flows?

(b)

What is the present value at 19 percent?


(c)What is the present value at 29 percent?

Answer & Explanation Solved by verified expert
3.9 Ratings (370 Votes)

a)
Statement showing Cash flows
Particulars Time PVf 11% Amount PV
Cash flows                    1.00                0.9009                950.00                855.86
Cash flows                    2.00                0.8116            1,060.00                860.32
Cash flows                    3.00                0.7312            1,340.00                979.80
Cash flows                    4.00                0.6587            1,200.00                790.48
PV of Cash flows            3,486.45
b)
Statement showing Cash flows
Particulars Time PVf 19% Amount PV
Cash flows                    1.00                0.8403                950.00                798.32
Cash flows                    2.00                0.7062            1,060.00                748.53
Cash flows                    3.00                0.5934            1,340.00                795.18
Cash flows                    4.00                0.4987            1,200.00                598.40
PV of Cash flows            2,940.43
c)
Statement showing Cash flows
Particulars Time PVf 29% Amount PV
Cash flows                    1.00                0.7752                950.00                736.43
Cash flows                    2.00                0.6009            1,060.00                636.98
Cash flows                    3.00                0.4658            1,340.00                624.22
Cash flows                    4.00                0.3611            1,200.00                433.33
PV of Cash flows            2,430.97

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Transcribed Image Text

Seaborn Co. has identified an investment project with thefollowing cash flows.YearCash Flow1$950          21,060          31,340          41,200          (a) If the discount rate is 11 percent, what is the presentvalue of these cash flows?(b)What is the present value at 19 percent?(c)What is the present value at 29 percent?

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