Use the following data to solve the following questions:
-Frontier Landscaping owns some equipment that is used in their operations. Management estimates that the equipment will last another three years and will generate the following future cash flows at the end of each year. $\begin{array}{llcc}
\text {Year 1}&\text {Year 2}&\text {Year 3}\
\hline \$ 4,000& \$ 6,000&\$ 7,000
\end{array}$
Calculate the present value of each of these future cash flows given a 4% discount rate.
A) $15,617
B) $9,394
C) $18,135
D) $35,165

Question

Use the following data to solve the following questions:
-Frontier Landscaping owns some equipment that is used in their operations. Management estimates that the equipment will last another three years and will generate the following future cash flows at the end of each year. $\begin{array}{llcc}
\text {Year 1}&\text {Year 2}&\text {Year 3}\
\hline \$ 4,000& \$ 6,000&\$ 7,000 
\end{array}$
 Calculate the present value of each of these future cash flows given a 4% discount rate.
A) $15,617
B) $9,394
C) $18,135
D) $35,165

Quizplus · Accepted Answer

The present value (PV) of future cash flows is calculated using the formula: $ PV = \frac{FV}{(1 + r)^n} $. For each year, calculate the PV and sum them: Year 1: $ \frac{4000}{1.04^1} = 3846.15 $, Year 2: $ \frac{6000}{1.04^2} = 5555.56 $, Year 3: $ \frac{7000}{1.04^3} = 6235.92 $. Total PV = 3846.15 + 5555.56 + 6235.92 = 15,637.63, which rounds to $15,617.

Use the Following Data to Solve the Following Questions: -Frontier Year 1Year 2Year 3$4,000$6,000$7,000\begin{array}{llcc}\text {Year 1}&\text {Year 2}&\text {Year 3}\\\hline \$ 4,000& \$ 6,000&\$ 7,000 \end{array}Year 1$4,000​Year 2$6,000​Year 3$7,000​​

Use the Following Data to Solve the Following Questions:
-Frontier $\begin{array}{llcc}\text {Year 1}&\text {Year 2}&\text {Year 3}\\\hline \$ 4,000& \$ 6,000&\$ 7,000 \end{array}$