Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with the following question: Present valueMixed streams Consider the mixed streams of cash flows shown in the following table, a. Find the present

Please help with the following question:

image text in transcribed

Present valueMixed streams Consider the mixed streams of cash flows shown in the following table, a. Find the present value of each stream using a 5% discount rate. b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $50,000 in each case. Is there some discount rate at which the present values of the two streams would be equal? a. The present value of the cash flows of stream A is S . (Round to the nearest dollar.) The present value of the cash flows of stream B is $ (Round to the nearest dollar.) b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $50,000 in each case. (Select the best answer below.) O A. Cash flow stream A, with a present value of $40,810, is higher than cash flow stream B's present value of $49,677 because the negative cash inflow occurs in A in the later years when their present value is greater, while the negative cash flows are received in the earlier years. O B. Cash flow stream A, with a present value of $49,677, is higher than cash flow stream B's present value of $40,810 because the positive cash inflows occur in A in the early years when their present value is greater, while the negative cash flows is received further in the future. Oc Cash flow strearri A, with a present value of $40,810, is lower than cash flow strearri B's present value of $49,677 because the negative cash inflow occurs in A in the early years, while the positive cash flows are received further in the future. OD. Cash flow stream A, with a present value of $40,810, is higher than cash flow stream B's present value of $49.677 because the positive cash inflows occur in A in the early years when their present value is greater, while the negative cash flow is received further in the future. 1: Data Table (Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet.) Year Cash flow stream A $-50,000 $10,000 S40,000 $20,000 530,000 $30,000 S20,000 $40,000 $10,000 S-50,000 $50,000 $50,000 Totals

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Project Finance In Theory And Practice

Authors: Stefano Gatti

3rd Edition

0128114010, 978-0128114018

More Books

Students also viewed these Finance questions

Question

here) and other areas you consider relevant.

Answered: 1 week ago