Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in after-tax cash savings of $9,000 the first year, $15,000 for the next two years, and $18,000 for the next two years. Interest is at 6%. Assume cash flows occur at the end of the year.
Required: Calculate the total present value of the cash flows.
PV of future cash flows
Year Cash Flow P V factor P V amount