Alex expects to incur personal costs of $3,800 in Year 1, and $4,300, $5,200 and $4,600 in costs over the following three years, respectively. What is the present value of these costs at 7 percent

$15,061.26  

Explanation:

The computation of the present value for these costs are shown below:

Year     Expected cash flowDiscount factor at 7%Present value

1            $3,800                  0.9345794393         $3,551.40

2           $4,300                  0.8734387283         $3,755.79

3           $5,200                  0.8162978769         $4,244.75

4           $4,600                  0.762895212         $3,509.32

Total                                                                               $15,061.26  

Refer to the discount factor table

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