Find the project balance in year 3 at i=10% n Cash flow 0 - 100000 1...

Question

Question

Find the project balance in year 3 at i=10% n Cash flow 0 - 100000 1 40000 2 40000 3 30000 loss of $10,700 O Gain of $10,000

business economics

Answer 1

Answer #1

Answer :

Loss of 8039

Explanation :

n	CF	PVIF	PVIF	discounted cash flow
0	-100000
1	40,000	[1/(1+0.10)^1]	0.9091	36,364
2	40,000	[1/(1+0.10)^2]	0.8264	33,056
3	30,000	[1/(1+0.10)^3]	0.7513	22, 539

So, projet balance in year 3= Initial investment - discounted cash flow in 3 years.

=1,00,000-36,364-33,056-22,539

=-8041.

Note: because of roundup there is 2 dollar difference.

Answer 2

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