Vault Company Wants to Purchase an Asset with a 3-Year $\text { Present Value of } 1$

question 14

Multiple Choice

Vault Company wants to purchase an asset with a 3-year useful life, which is expected to produce cash inflows of $10,000 each year for two years, and $15,000 in year 3.Vault has a 14% cost of capital, and uses the following factors.What is the present value of these future cash flows? $\text { Present Value of } 1$
$\begin{array}{lll}\text { Period } & 14 \% \\1 & .88 \\2 & .77 \\ 3& .67\end{array}$

• A)$30,800
• B)$30,400
• C)$26,550
• D)$17,750

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Definitions:

Joint Activity

A collaborative effort or project involving two or more parties working together towards a common goal.

Partnership

A legitimate business structure where multiple individuals participate in managing the operation and sharing its earnings.

Sold His Share

The act of transferring one's ownership interest in a company or partnership to another party.

Partnership

An authorized type of business collaboration where partners share both the management duties and the financial gains.