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3 November, 22:28

Capstone Investments is considering a project that will produce cash inflows of $11,000 in year 1, $24,000 in year 2, and $36,000 in year 3. What is the present value of these cash inflows if the company assigns the project a discount rate of 12 percent?

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  1. 3 November, 22:53
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    Total = $54,578.17

    Explanation:

    Giving the following information:

    Capstone Investments is considering a project that will produce cash inflows of $11,000 in year 1, $24,000 in year 2, and $36,000 in year 3.

    To calculate the present value, we need to use the following formula:

    PV = FV / (1+i) ^n

    Year 1 = 11,000/1.12 = 9,821.43

    Year 2 = 24,000/1.12^2 = 19,132.65

    Year 3 = 36,000/1.12^3 = 25,624.09

    Total = $54,578.17
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