Winner Lei is thinking of buying a miniature golf course. It is expected to generate cash...
Winner Lei is thinking of buying a miniature golf course. It is expected to generate cash flows of $40,000 per year in years 1, $50,000 per year in year 2 and year 3. If the appropriate discount rate is 10%, what is the present value of these cash flows? I. $285,288 II. $167,943 III. $235,048 IV. 115,251 V. None of the options specified here 10 points
Homework Answers
Present value =Cash flows*Present value of discounting factor(rate%,time period)
=40,000/1.1+50,000/1.1^2+50,000/1.1^3
which is equal to
=$115,251(Approx).
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