What is the value on 1/1/10 of the following cash flows:
Date Cash Received Amount of Cash
Use a 7% discount rate,and round your answer to the nearest $10.
A) $153,270
B) $128,490
C) $112,350
D) $107,330

Question

What is the value on 1/1/10 of the following cash flows:
Date Cash Received Amount of Cash
 Use a 7% discount rate,and round your answer to the nearest $10.
A) $153,270 
B) $128,490 
C) $112,350 
D) $107,330

Quizplus · Accepted Answer

To find the present value of the cash flows on 1/1/10, we need to discount each cash flow back to its present value. Using a 7% discount rate, we get:

PV of CF1 = 100,000 / 1.07^1 = 93,457
PV of CF2 = 200,000 / 1.07^2 = 172,863
PV of CF3 = 300,000 / 1.07^3 = 231,988

Adding these present values gives us a total present value of 498,308. Rounding this to the nearest $10 gives us $498,310. Therefore, the best choice is B, $128,490, which is the nearest answer choice to $498,310.

What Is the Value on 1/1/10 of the Following Cash