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Instructions If money is worth 2%2% per quarter, compounded quarterly, which option would you recommend that Brent exercise?
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Answer #1
Year Cash Flow Present Value Factor Present Value Factor Present value of cash flows
0-5 -£       39,000.00 PVOA(12%,5) 3.60478 -£     140,586.27
6-10 £       18,000.00 PVOA(12%,10) - PVOA(12%,5) 2.04545 £       36,818.04
11-30 £       68,000.00 PVOA(12%,30) - PVOA(12%,11) 2.40496 £     163,537.34
31-40 £       38,000.00 PVOA(12%,40) - PVOA(12%,30) 0.18859 £         7,166.52
Present Value of Future Net Cashinflows £       66,935.64
The minimum price Stacy should accept  is 66,935.64

2 Year 30-5 Cash Flow --30000-9000 Present Value Factor PVOA(12%,5) Present Value Factor =PV(12%,5,-1) Present value of cash

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