If management wants to get a minimum of 6 per year rate of


The management of Pretty Umbrellas Inc. expects the following end-of-year cash flows from a new product:

Year 1: $10,000; Year 2: $12,000; Year 3: $22,000; Year 4: $15,000. If management wants to get a minimum of 6% per year rate of return out of this investment, what is the most the company should invest today (i.e., what is the PV)?

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Finance Basics: If management wants to get a minimum of 6 per year rate of
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