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Myca Corp. has a project with the following cash flows. What is the value of the cash flows today assuming an annual interest rate of 9.5 percent?Year Cash Flow1 $ 1,720 2 2,150 3 2,465 4 2,475 a. $6,189.26b. $7,886.46c. $8,810.00d. $6,962.92e. $7,624.40

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facundobuzzetti

Answer:

Total PV= $6,962.93

Explanation:

Giving the following information:

Annual interest rate= 9.5%

Cf1=  $1,720

Cf2= $2,150

Cf3= $2,465

Cf4= $2,475

To calculate the present value, we need to use the following formula on each cash flow:

PV= FV/(1+i)^n

Cf1= 1,720/1.095= 1,570.78

Cf2= 2,150/1.095^2= 1,793.12

Cf3= 2,465/1.095^3= 1,877.48

Cf4= 2,475/1.095^4= 1,721.55

Total PV= $6,962.93

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