SOLUTION: In the following question and answer, I am trying to figure out where the "1.09^3" number comes from in the NPV solution. What is this and where do I find it? Here is the problem

Algebra ->  Finance -> SOLUTION: In the following question and answer, I am trying to figure out where the "1.09^3" number comes from in the NPV solution. What is this and where do I find it? Here is the problem      Log On


   

Question 955065: In the following question and answer, I am trying to figure out where the "1.09^3" number comes from in the NPV solution. What is this and where do I find it? Here is the problem:
The Techron I costs $222,000, has a three-year life, and has pretax operating costs of $57,000 per year. Use straight-line depreciation to zero over the project’s life and assume a salvage value of $34,000. If your tax rate is 35 percent and your discount rate is 9 percent. Find OCF and NPV:
OCF = −$57,000(1 − 0.35) + 0.35($222,000/3) = −$11,150
NPV = −$222,000 − $11,150(PVIFA9%,3) + ($22,100/1.09^3) = −$233,158.68
Thank you for your help!
Answer by macston(5194) About Me  (Show Source):
You can put this solution on YOUR website!
In your NPV formula, the final term should be something like:
C%5BT%5D%2F%281%2Br%29%5ET Or R%5Bt%5D%2F%281%2Bi%29%5Et
The 1.09%5E3 is (1+r)^T ((1+discount rate) to the time power)