a. What is the present value of the following set of cash flows, discounted at

10.8%

per year?

Year	1	2	3	4	5
CF	$10	$18	$26	$34	$42

b. What is the present value of the following set of cash flows, discounted at

10.8%

per year?

Year	1	2	3	4	5
CF	$42	$34	$26	$18	$10

c. Each set contains the same cash flows

($10,

$18,

$26,

$34,

$42),

so why is the present value different?

Question content area bottom

Part 1

a. What is the present value of the following set of cash flows, discounted at

10.8%

per year?

Year	1	2	3	4	5
CF	$10	$18	$26	$34	$42

The present value of the cash flow stream is $

enter your response here. (Round to the nearest cent.)

Part 2

b. What is the present value of the following set of cash flows, discounted at

10.8%

per year?

Year	1	2	3	4	5
CF	$42	$34	$26	$18	$10

The present value of the cash flow stream is

enter your response here. (Round to the nearest cent.)

Part 3

c. Each set contains the same cash flows

($10,

$18,

$26,

$34,

$42),

so why is the present value different?(Select the best choice below.)

A.The present value in part

(b)

is higher because the larger cash flows occur sooner.

B.The present value in part

(a)

is lower because the larger cash flows occur sooner.

C.The present value in part

(b)

is lower because the larger cash flows occur sooner.

D.The present value in part

(a)

is higher because the larger cash flows occur sooner.