A firm is contemplating an investment project which costs $1,000 immediately but will produce positive cash flow of $700 one year later and $1,000 in the following year. What is the present value of the project, using a discount rate of (A) 20% and (B) 30%? Solution Hi, Please find the correct answer as followS: a) Present Value = -1000+700/(1+20%)^1+1000/(1+20%)^2 =$277.78 b) Present Vaue = -1000+700/(1+30%)^1+1000/(1+30%)^2 =$130.18.