Discounting Methods: The concept of discounting should be used in order to keep track of real costs for the purpose of planning. Calculate the present value of the estimated benefit stream at all three discount rates. Explain the effect of higher and lower discount rates.
Hopeful House, a nonprofit orgnanization serving the Big City community, is considering building a playground. It needs to rationally convince the Community Chest that its project is worthy of a special grant by calculating the present value of future benefits. The financial manager estimates future benefits of the playground at