Question

What is the present value of the following set of end of the year cash flows:
Year 1: $450; Year 2: $600; and then an eight year annuity of $400 per year if the discount rate is 9%?

Group of answer choices

$2,214

$2,462

$2,781

$3,112

$3,244

Answer 1

Ans $ 2781

Year	Project Cash Flows (i)	DF@ 9%	DF@ 9% (ii)	PV of Project ( (i) * (ii) )
1	450	1/((1+9%)^1)	0.917	413
2	600	1/((1+9%)^2)	0.842	505
3	400	1/((1+9%)^3)	0.772	309
4	400	1/((1+9%)^4)	0.708	283
5	400	1/((1+9%)^5)	0.650	260
6	400	1/((1+9%)^6)	0.596	239
7	400	1/((1+9%)^7)	0.547	219
8	400	1/((1+9%)^8)	0.502	201
9	400	1/((1+9%)^9)	0.460	184
10	400	1/((1+9%)^10)	0.422	169
		PV		2,781