AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...

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AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each...

AAA Insurance Co. has made an investment that will generate a cash flow of $38,000 each year for the next five years. If the company uses a discount rate of 14 percent on its investments, what is the present value of this investment?

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Answer 1

Answer #1

Ans $ 130457.08

Year	Project Cash Flows (i)	DF@ 14%	DF@ 14% (ii)	PV of Project A ( (i) * (ii) )

1	38000	1/((1+14%)^1)	0.877	33,333.33
2	38000	1/((1+14%)^2)	0.769	29,239.77
3	38000	1/((1+14%)^3)	0.675	25,648.92
4	38000	1/((1+14%)^4)	0.592	22,499.05
5	38000	1/((1+14%)^5)	0.519	19,736.01
		NPV		1,30,457.08

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Answer 2

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