rice Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash avings of $9,500 the first year, $15.500 for the next two years, and $18,500 for the next two years. Interest is at 10%. Assume ash flows occur at the end of the year.
rice Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash avings of $9,500 the first year, $15.500 for the next two years, and $18,500 for the next two years. Interest is at 10%. Assume ash flows occur at the end of the year.
Chapter17: The Management Of Cash And Marketable Securities
Section: Chapter Questions
Problem 2P
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![Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash
savings of $9,500 the first year, $15.500 for the next two years, and $18,500 for the next two years. Interest is at 10%. Assume
cash flows occur at the end of the year.
Required:
Calculate the total present value of the cash flows.
Note: Use tables, Excel, or a financial calculator. Do not round intermediate calculations. Round your final answer to
nearest whole dollar. (FV of $1. PV of $1. FVA of $1. PVA of $1, EVAD of $1 and PVAD of $1)
Total present value of the cash flows](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3df4b4c9-a718-49a1-a527-a85369d70bb9%2F784b1748-2efb-489a-a2cd-2f470dfe2fec%2Ftnzxv6n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash
savings of $9,500 the first year, $15.500 for the next two years, and $18,500 for the next two years. Interest is at 10%. Assume
cash flows occur at the end of the year.
Required:
Calculate the total present value of the cash flows.
Note: Use tables, Excel, or a financial calculator. Do not round intermediate calculations. Round your final answer to
nearest whole dollar. (FV of $1. PV of $1. FVA of $1. PVA of $1, EVAD of $1 and PVAD of $1)
Total present value of the cash flows
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