Question
Please show how you got PV and IRR Consider two streams of cash flows, A and B. Stream As first cash flow is $8,900 and
Please show how you got PV and IRR
Consider two streams of cash flows, A and B. Stream As first cash flow is $8,900 and is received three years from today. Future cash flows in Stream A grow by 4 percent in perpetuity. Stream Bs first cash flow is $10,000, is received two years from today, and will continue in perpetuity. Assume that the appropriate discount rate is 12 percent. |
a. | What is the present value of each stream?(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
Present value | |
Stream A | $ |
Stream B | $ |
b. | Suppose that the two streams are combined into one project, called C. What is the IRR of Project C?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
IRR | % |
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