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Huggins Co
| Huggins Co. has identified an investment project with the following cash flows. |
| Year | Cash Flow | |||||
| 1 | $ | 870 | ||||
| 2 | 1,230 | |||||
| 3 | 1,490 | |||||
| 4 | 1,650 | |||||
|
If the discount rate is 10 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Present value | $ |
|
What is the present value at 20 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Present value | $ |
|
What is the present value at 30 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| Present value | $ |
Expert Solution
Present Value at 10% discount rate = 870/(1+0.1)1+1230/(1+0.1)2+1490/(1+0,1)3+1650/(1+0.1)4
= 790.91+1016.529+1119.459+1126.972
=4,053.87$
Present Value at 20% discount rate = 870/(1+0.2)1+1230/(1+0.2)2+1490/(1+0,2)3+1650/(1+0.2)4
=725.00+854.1667+862.2685+795.7176
=3,237.15$
Present Value at 30% discount rate = 870/(1+0.3)1+1230/(1+0.3)2+1490/(1+0,3)3+1650/(1+0.3)4
= 669.23+727.8107+678.20+577.7109
= 2,652.95$
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