QuestionJuly 19, 2025

Tiger Trucking Company is considering a project that will produce cash inflows of 18,000 at the end of Year 1, 32,000 in Year 2, and 45,000 in Year 3. What is the present value of these cash inflows at a discount rate of 9 percent? Select one: a. 78.195.78 b. 70,181.89 C. 65,615.21 d. 78,485.76 e. 87,112.15

Tiger Trucking Company is considering a project that will produce cash inflows of 18,000 at the end of Year 1, 32,000 in Year 2, and 45,000 in Year 3. What is the present value of these cash inflows at a discount rate of 9 percent? Select one: a. 78.195.78 b. 70,181.89 C. 65,615.21 d. 78,485.76 e. 87,112.15
Tiger Trucking Company is considering a project
that will produce cash inflows of 18,000 at the
end of Year 1, 32,000 in Year 2, and 45,000 in
Year 3. What is the present value of these cash
inflows at a discount rate of 9 percent?
Select one:
a. 78.195.78
b. 70,181.89
C. 65,615.21
d. 78,485.76
e. 87,112.15

Solution
4.5(192 votes)

Answer

\ 77,615.21 Explanation 1. Calculate Present Value for Year 1 Use the formula PV = \frac{FV}{(1 + r)^n} where FV = \18,000, r = 0.09, and n = 1. Calculate PV_1 = \frac{18,000}{(1 + 0.09)^1} = \frac{18,000}{1.09} = \16,513.76. 2. Calculate Present Value for Year 2 Use the same formula with FV = \32,000, n = 2. Calculate PV_2 = \frac{32,000}{(1 + 0.09)^2} = \frac{32,000}{1.1881} = \26,927.66. 3. Calculate Present Value for Year 3 Use the same formula with FV = \45,000, n = 3. Calculate PV_3 = \frac{45,000}{(1 + 0.09)^3} = \frac{45,000}{1.295029} = \34,173.79. 4. Sum Present Values Add PV_1, PV_2, and PV_3: PV_{total} = 16,513.76 + 26,927.66 + 34,173.79 = \77,615.21.

Explanation

1. Calculate Present Value for Year 1<br /> Use the formula $PV = \frac{FV}{(1 + r)^n}$ where $FV = \$18,000$, $r = 0.09$, and $n = 1$. Calculate $PV_1 = \frac{18,000}{(1 + 0.09)^1} = \frac{18,000}{1.09} = \$16,513.76$.<br />2. Calculate Present Value for Year 2<br /> Use the same formula with $FV = \$32,000$, $n = 2$. Calculate $PV_2 = \frac{32,000}{(1 + 0.09)^2} = \frac{32,000}{1.1881} = \$26,927.66$.<br />3. Calculate Present Value for Year 3<br /> Use the same formula with $FV = \$45,000$, $n = 3$. Calculate $PV_3 = \frac{45,000}{(1 + 0.09)^3} = \frac{45,000}{1.295029} = \$34,173.79$.<br />4. Sum Present Values<br /> Add $PV_1$, $PV_2$, and $PV_3$: $PV_{total} = 16,513.76 + 26,927.66 + 34,173.79 = \$77,615.21$.
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