At the End of the Next Four Years, a New

question 10

Multiple Choice

At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?

• A)$41,556.
• B)$47,700.
• C)$32,400.
• D)$38,100.($8,000 x .97087) + ($12,000 x .94260) + ($10,000 x .91514) + ($15,000 x .88849) = $7,767 + 11,311 + 9,151 + 13,327 = $41,556

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