question archive The ABC Block Company anticipates receiving $68,000 per year from its investments (with no change) over the next 10 years, with the first payment occuring exactly one year from now
The ABC Block Company anticipates receiving $68,000 per year from its investments (with no change) over the next 10 years, with the first payment occuring exactly one year from now
Subject:EconomicsPrice:3.87 Bought7
The ABC Block Company anticipates receiving $68,000 per year from its investments (with no change) over the next 10 years, with the first payment occuring exactly one year from now. If ABC's interest-free MARR is 13% and the general inflation rate is 4.4%, what is the net present value of these 10 cash flows?"
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Answer:
'The actual MARR can be calculated as : MARRi + inflation + MARRi x inflation
MARRi = 13% and inflation = 4.4%
acutal MARR (r) = 17.972%
Cash flows: $68000 per year
time period = 10 years
PV = 68000/(1+r) + 68000/(1+r)2 + .... + 68000/(1+r)10
PV = $305902.22
