Collins Limited Estimated the Future Cash Outflows Over the Next

question 3

Multiple Choice

Collins Limited estimated the future cash outflows over the next three years relating to settlement of warranty obligations would be as follows: 1 year from now: $20 000
2 years from now: $38 000
3 years from now: $45 000
Collins Limited calculates that the present value of the total expected future cash outflow, using a discount rate of 8%, is:

• A) $ 86 820
• B) $ 88 301
• C) $ 95 370
• D) $103 000

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