Given the mixed streams of cash flows shown in the following table, answer parts (a) and (b):

Question:

a. Find the present value of each stream, using a 15 % discount rate.
b. Compare the calculated present values, and discuss them in light of the fact that the undiscounted total cash flows amount to $150,000 in each case.

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Introduction to Corporate Finance What Companies Do

ISBN: 978-1111222284

3rd edition

Authors: John Graham, Scott Smart

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Question Posted: Mar 26, 2015 06:19 AM

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Given the mixed streams of cash flows shown in the following table, answer parts (a) and (b):

Question:

Cash Flow Stream Year $50,000 40,000 30,000 20,000 10.000 10,000 20,0 30,0 40,0 515 Totals

Step by Step Answer:

a b Cash flow stream A has a higher present value 109857 than cash flow st...View the full answer

Introduction to Corporate Finance What Companies Do

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