Question
10. (Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are
10.(Present value of an uneven stream of payments)
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
| Investment |
| ||||||||
| End of Year | A | B | C | ||||||
| 1 | $ | 1,000 | $ | 3,000 | $ | 5,000 | |||
| 2 | 2,000 | 3,000 | 5,000 | ||||||
| 3 | 3,000 | 3,000 | (5,000) | ||||||
| 4 | (4,000) | 3,000 | (5,000) | ||||||
| 5 | 4,000 | 7,000 | 15,000 | ||||||
What is the present value of each of these three investments if the appropriate discount rate is 15 percent?
a.What is the present value of investment A at an annual discount rate of 15 percent?
$____(Round to the nearest cent.)
b.What is the present value of investment B at an annual discount rate of 15 percent?
$____-(Round to the nearest cent.)
c.What is the present value of investment C at an annual discount rate of 15 percent?
$____(Round to the nearest cent.)
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Finance At The Threshold
Authors: Christopher Houghton Budd
1st Edition
0566092115, 978-0566092114
