Using the tables in Exhibits 26-3 and 26-4, determine the present value of the following cash flows,

Question:

Using the tables in Exhibits 26-3 and 26-4, determine the present value of the following cash flows, discounted at an annual rate of 15 percent.
Exhibit 26-3: Present Value of $1 Payable in n Periods

Exhibit 26-4: Present Value of a $1 Annuity Receivable Each Period for n Periods

a. $40,000 to be received 20 years from today.
b. $24,000 to be received annually for 10 years.
c. $16,000 to be received annually for five years, with an additional $20,000 salvage value expected at the end of the fifth year.
d. $30,000 to be received annually for the first three years, followed by $20,000 received annually for the next two years (total of five years in which cash is received).

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...