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Present Value of the Cash Inflows

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A project which requires an initial investment of $25,000, has the following for annual cash inflows:

Year Cash Inflow

1 $5,000

2 8,000

3 12,000

4 8,000

If the cost of capital is 12%, the present value of the cash inflows is

$25,282, and the project can be accepted.

$24,467, and the project can be accepted.

$24,467, and the project should be rejected.

$25,282, and the project should be rejected.

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The solution explains how to calculate the present value of the cash inflows.

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