Question

Problem 5-1 Present Value and Multiple Cash Flows (LO 1] Fox Co. has identified an investment project with the following cash flows. Year NM Cash Flow $ 1,210 1,120 1,550 1,910 a. If the discount rate is 9 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value at 17 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the present value at 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value at 9 percent Present value at 17 percent Present value at 23 percent C.

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Answer 1

a. The present value is computed as follows:

Press key 2nd and then press CF.

In CF0 enter = 0 ( Since there is no cash outflow)

Press down arrow key and enter 1,210 in C01.

Now press down arrow key and enter 1 in F01

Press down arrow key and enter 1,120 in C02.

Now press down arrow key and enter 1 in F02

Press down arrow key and enter 1,550 in C03.

Now press down arrow key and enter 1 in F03

Press down arrow key and enter 1,910 in C04.

Now press down arrow key and enter 1 in F04

Now press NPV, it will ask for I, in which plug 9.

Finally press down arrow key, to get NPV press CPT

The NPV that the calculator will give is $ 4,602.75

b. The present value is computed as follows:

Press key 2nd and then press CF.

In CF0 enter = 0 ( Since there is no cash outflow)

Press down arrow key and enter 1,210 in C01.

Now press down arrow key and enter 1 in F01

Press down arrow key and enter 1,120 in C02.

Now press down arrow key and enter 1 in F02

Press down arrow key and enter 1,550 in C03.

Now press down arrow key and enter 1 in F03

Press down arrow key and enter 1,910 in C04.

Now press down arrow key and enter 1 in F04

Now press NPV, it will ask for I, in which plug 17.

Finally press down arrow key, to get NPV press CPT

The NPV that the calculator will give is $ 3,839.41.

c. The present value is computed as follows:

Press key 2nd and then press CF.

In CF0 enter = 0 ( Since there is no cash outflow)

Press down arrow key and enter 1,210 in C01.

Now press down arrow key and enter 1 in F01

Press down arrow key and enter 1,120 in C02.

Now press down arrow key and enter 1 in F02

Press down arrow key and enter 1,550 in C03.

Now press down arrow key and enter 1 in F03

Press down arrow key and enter 1,910 in C04.

Now press down arrow key and enter 1 in F04

Now press NPV, it will ask for I, in which plug 23.

Finally press down arrow key, to get NPV press CPT

The NPV that the calculator will give is $ 3,391.46

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