Annual after-tax cash inflows 34,000   After-tax cash inflows at the end of years 3, 6, 9, and 12   101,000 Life of project 12 years 12 years   What is the internal rate of return for Proposal X? For Proposal Y? Use Excel to compute your answers. Round answers to the nearest whole percentage (ex: 0.1854 = 19%)   Proposal X Answer   % Proposal Y Answer

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.