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Consider two streams of cash flows, A and B. Stream As first cash flow is $9,800 and is received three years from today. Future cash
Consider two streams of cash flows, A and B. Stream As first cash flow is $9,800 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetuity. Stream Bs first cash flow is $9,100, is received two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 11 percent. a.What is the present value of each stream? b.Suppose that the two streams are combined into one project, called C. What is the IRR of Project C?
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