Question

Question 17 (6 points) "VT, Inc., is a small company that uses ultra-Wideband technology to develop devices that can detect objects including people) inside buildings, behind walls, or below ground. The company expects to spend $175,000 per year before a product can be marketed. At a compound interest rate of 12% per year, what is the total equivalent future amount of the company's expenses at the end of 5 years? (All the alternatives presented below were calculated using compound interest factor tables including all decimal places) $1,111,740 5630,840 $1,026,655 $875,000

Answer 1

	Question 17
	Option 2 is the correct answer
	Year	Cash flow	Present value factor@12%	Present value of cash flow
	A	B	C=1/(1+12%)^A	D=B*C
	1	175,000	0.8929	156,250
	2	175,000	0.7972	139,509
	3	175,000	0.7118	124,562
	4	175,000	0.6355	111,216
	5	175,000	0.5674	99,300
			Present value of cash flow	630,836
	Question 18
	Option 4 is the correct answer
	Year	Cash flow	Present value factor@12%	Present value of cash flow
	A	B	C=1/(1+12%)^A	D=B*C
	0	0	1.0000	-
	1	-	0.9091	-
	2	-	0.8264	-
	3	750	0.7513	563
	4	750	0.6830	512
	5	750	0.6209	466
	6	750	0.5645	423
			Present value of cash flow	1,965