107 791
Assignments Done
100%
Successfully Done
In August 2024

# Answer to Question #123000 in Finance for Nini

Question #123000
1)Cash inflows expected from a project are $28,000 for year 1,$22,000 for year 2, $20,000 for year 3,$25,000 for year 4 and $20,000 for year 5. Given the discount rate of 10%, what is the total present value of cash flow of this project? 2)Melinda needs to accumulate$50,000. In order to do so, she plans to save at the start of every year starting today for 10 years with an interest rate of 10% per annum. How much will she need to deposit every year to reach that amount?
1
2020-06-24T13:45:15-0400

1)Cash inflows expected from a project are $28,000 for year 1,$22,000 for year 2, $20,000 for year 3,$25,000 for year 4 and $20,000 for year 5. Given the discount rate of 10%, what is the total present value of cash flow of this project? We calculate the present value of a cashflow using the formula: "PV = \\dfrac{CF}{(1 + r)^t}" 2)Melinda needs to accumulate$50,000. In order to do so, she plans to save at the start of every year starting today for 10 years with an interest rate of 10% per annum. How much will she need to deposit every year to reach that amount?

The future value of an annuity is given as:

"FV = P(1 + r) \\left[\\dfrac{(1 + r)^n - 1) }{ r}\\right]\\\\[0.3cm]"

Therefore:

"FV = P(1 + r) \\left[\\dfrac{(1 + r)^n - 1) }{ r}\\right]\\\\[0.3cm]\n\n50,000 =P(1 + 0.1)\\left[ \\dfrac{(1 + 0.1)^{10} - 1}{0.1}\\right]\\\\[0.3cm]\n50,000 = 17.5312P\\\\[0.3cm]\nP = \\dfrac{50,000}{17.5312}\\\\[0.3cm]\n\\color{red}{P \\approx \\\$2,852.06}"

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!