If an analyst predicts that the benefits of a three-year project would be $100,000 at the end of the first year, $110,000 at the end of the second year, and $120,000 at the end of the project life, the scrap value of the project is expected to be $25,000 upon resale, and the discount rate is 4%, how much is the present value of total benefits for the project?
Present value of benefits = 100,000*PVF(4%, 1 year) + 110,000*PVF(4%, 2 years) + 120,000*PVF(4%, 3 years) + 25000*PVF(4%,3 years)
= 100,000*0.962 + 110,000*0.925 + 120,000*0.889 + 25000*0.889
= $326,855
If an analyst predicts that the benefits of a three-year project would be $100,000 at the...
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