Question
Present value - Mixed streams Consider the mixed streams of cash flows shown in the following table Cash Flow Stream Year A B 1 $22,500
Present value - Mixed streams Consider the mixed streams of cash flows shown in the following table
| Cash Flow Stream | ||
| Year | A | B |
| 1 | $22,500 | $7,500 |
| 2 | $18,750 | $11,250 |
| 3 | $15,000 | $15,000 |
| 4 | $11,250 | $18,750 |
| 5 | $7,500 | $22,500 |
| Totals | $75,000 | $75,000 |
|
|
(a) Find the present value of each stream using a 11% discount rate
(b) Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $75,000 in each case.
(c) Show computations using an Excel Spreadsheet. When solving for the present value of a single cash flow using an Excel spreadsheet, you will need to enter the values of Rate, Nper, Fv, Pmt, and Type into the present value function
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Quantitative Analysis For Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Hale
14th Edition
0137943601, 9780137943609
