As corporate manager for acquisitions, your group is assessing a project that is expected to produce cash flows of $750 at the end of year 1

Finance Dec 21, 2020

As corporate manager for acquisitions, your group is assessing a project that is expected to produce cash flows of $750 at the end of year 1. $1,000 at the end of year 2, $850 at the end of year 3, and $1,300 at the end of Year 4. If the firm requires a minimum IRR or "hurdle rate" of 10% for these types of investments, what is most you should pay for this project? Your answer should be between 2738.00 and 4355.00, rounded to 2 decimal places, with no special characters.

Expert Solution

Ans 3034.80

Year	Project Cash Flows (i)	DF@ 10%	DF@ 10% (ii)	PV of Project ( (i) * (ii) )
0	0	1	1	-
1	750	1/((1+10%)^1)	0.909091	681.82
2	1000	1/((1+10%)^2)	0.826446	826.45
3	850	1/((1+10%)^3)	0.751315	638.62
4	1300	1/((1+10%)^4)	0.683013	887.92
		PV	3,034.80

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