At the end of the next four years,a new machine is expected to generate net cash flows of $8,000,$12,000,$10,000,and $15,000,respectively.What are the cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?
A)$41,557.
B)$47,700.
C)$32,403.
D)$38,108.

Question

Quizplus · Accepted Answer

The present value of future cash flows is calculated by discounting each cash flow at the given interest rate. Using the formula PV = CF / (1 + r)^n for each year and summing them gives the total present value of $41,557.

At the End of the Next Four Years,a New Machine