Question 12 of 12 12 00 points Problem 627 Discounted Cash F

Question 12 (of 12) 12. 00 points Problem 6-27 Discounted Cash Flow Analysis LOT The appropriate discount rate for the following cash flows is 9 percent compounded quarterly S 780 860 1,450 What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g. 32.16.) Present value eBook & Resources References Difficulty Basic Worksheet

Solution

annual rate of compounding = (1 + 9%/4)⁴ - 1 = 9.3083%

Present value = 2,449.02

Discount rate	9.3083%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
780.000	1	713.58	713.58
860.000	2	719.77	1,433.35
-	3	-	1,433.35
1,450.000	4	1,015.68	2,449.02