Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 27

What is the present value of a stream of 5 end-of-year annual cash receipts of $500 given a discount rate of 14 percent? Use both the appropriate table in the text (Appendix C, Table 2) and the appropriate function in Excel to answer this question.

Step 1 of 2

The present value table makes easy the work meaningfully in computing present values of the future amount. The tables contain factors for a combination of periods and interest rates. These factors are multiplied by cash flows to find the present values. Table 2 from Appendix A is used to find the present value.