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Calculate the present value of the cash inflows

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Assignment

Paramount Company is considering purchasing new equipment costing$700,000. The management has estimated that the equipment will generate cash flows asfollows:

Year 1

$200,000

2

200,000

3

250,000

4

250,000

5

150,000

Present value of$1:

6%

6%

7%

8%

9%

1

0.943

0.935

0.926

0.917

0.909

2

0.89

0.873

0.857

0.842

0.826

3

0.84

0.816

0.794

0.772

0.751

4

0.792

0.763

0.735

0.708

0.683

5

0.747

0.713

0.681

0.65

0.621

Thecompany's required rate of return is8%. Using the factors in thetable, calculate the present value of the cash inflows. (Round all calculations to the nearest wholedollar)

A. $890,000
B. $841,000
C. $750,000
D. $850,000.

Reference no: EM131786787

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