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Multiple Choice Question 78 Transport Company has made an investment in another company that will guarantee it a cash flow of $37,250 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment

Respuesta :

Answer:

$124,869.45

Explanation:

The computation of the present value of the investment is shown below:

= Cash flow yearly × PVIFA for 5 years at 15%

= $37,250 × 3.3522

= $124,869.45

Refer to the PVIFA table

Simply we multiply the annual payment with the PVIFA so that the accurate amount could arrive

The present value is come after considering the discount rate of 15%  for the given number of periods i.e 5 years

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