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1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to
1. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers to pay you $6,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent?
2. Future Value and Multiple Cash Flows [LO1] Fuente, Inc., has identified an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at a discount rate of 11 percent? At 24 percent?
Year
Cash Flow
1
$1,075
2
1,210
3
1,340
4
1,420
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