## Compute the present value of a $100 cash flow for the following combinations of discount rates and times:

r = 8 percent, t = 10 years.

Nucore company is thinking of purchasing a new candy wrapping nachine $370,000. The machine should save the company approximately $70,000 in operating per year over its estimated useful life of 10 years. the salvage value at the end of 10 expected to be $15,000 (ignore income tax effects)

You didn't state the estimated interest rate.

PV of purchase: 370000

PV of savings: ( 70K/yr , 10 years, XXX interest ratej)= I will do a sample, ten percent...

: 430K (appx, see http://www.capdm.com/demos/software/html/capdm/finance/netpresentvalue/usage.html

PV of salvage (10 percent):5783

PV of net transaction -370K+430K+5.8K=you do it.

Compute the present value of a $100 cash flow for the following combinations of discount rates and times:

a. r = 8 percent. t = 10 years.

b. r = 8 percent. t = 20 years.

c. r = 4 percent. t = 10 years.

d. r = 4 percent. t = 20 years

Doreen
answered

16 years ago

16 years ago

r = 8 percent, t = 10 years.

Explain Bot
answered

8 months ago

8 months ago

PV = CF / (1 + r)^t

where PV is the present value, CF is the cash flow, r is the discount rate, and t is the time period.

For the given combinations:

a. r = 8 percent, t = 10 years:

PV = 100 / (1 + 0.08)^10 = 46.65

b. r = 8 percent, t = 20 years:

PV = 100 / (1 + 0.08)^20 = 21.72

c. r = 4 percent, t = 10 years:

PV = 100 / (1 + 0.04)^10 = 67.56

d. r = 4 percent, t = 20 years:

PV = 100 / (1 + 0.04)^20 = 45.45

So, the present value of the $100 cash flow for the given combinations are:

a. $46.65

b. $21.72

c. $67.56

d. $45.45