Answered

Get the most out of your questions with the extensive resources available on IDNLearn.com. Discover prompt and accurate answers from our community of experienced professionals.

The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $250,000$37,500$180,000$300,000$750,000$725,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar

Sagot :

Parrainidn

Answer: $1,694,292

Explanation:

The present value is simply the sum of the discounted value of the various cash flows.

[tex]= \frac{250000}{1 + 0.065} + \frac{37500}{1.065^{2} } + \frac{180000}{1.065^{3}} + \frac{300000}{1.065^{4}} + \frac{750000}{1.065^{5}} + \frac{725000}{1.065^{6}}[/tex]

= $1,694,291.63

= $1,694,292

Your presence in our community is highly appreciated. Keep sharing your insights and solutions. Together, we can build a rich and valuable knowledge resource for everyone. Thank you for visiting IDNLearn.com. We’re here to provide dependable answers, so visit us again soon.