Find the present value of the following stream of a firm's cash flows, assuming that the firm's opportunity cost is 14 percent.
A) $131,068
B) $ 19,830
C) $ 14,850
D) $120,820

Question

Find the present value of the following stream of a firm's cash flows, assuming that the firm's opportunity cost is 14 percent. 
A) $131,068 
B) $ 19,830 
C) $ 14,850 
D) $120,820

Quizplus · Accepted Answer

To find the present value of the cash flows, we need to discount each cash flow using the opportunity cost of the firm which is 14%. Using a financial calculator or an Excel spreadsheet, we get the present value of the cash flows as $131,068. Therefore, the best choice is A.

Find the Present Value of the Following Stream of a Firm's