Correct Answer:

$$987,442$

Jennifer

So that is the present$-$day value of expected cash flow $3$ years from now?

Zuzanna Lukanus

Yes, Monster expects a $9\mathrm{.}6\%$ annual return on their investments, so we must discount the future cash flows by $9\mathrm{.}6\%$ for every year in the future they occur.

What is the present value of all future cash flows? Note: do not include value of Year $0$ cash flow.

Monster Beverage is considering purchasing a new canning machine.

This machine costs $$3,500,000$ up front.

Required return $=9\mathrm{.}6\%$

$\backslash$table$[[$Year$,$Cash Flow,Discounted Cash Flow$],[0,$$$-3,500,000,$$$-3,500,000$