Considering an uneven cash flow stream Year Cash Flow 0 $0 1 $250 2 400 3 500 4

Question

Considering an uneven cash flow stream Year Cash Flow 0 $0 1 $250 2 400 3 500 4 600 5 600
1. What is the present (Year 0) value if the opportunitycost (discount) rate is 10%? 2. Add an outflow (cost) of $1,000 at Year 0. Whatis the present value (or net present value) of the steam? Help please... this is confusing. Thxs Year Cash Flow 0 $0 1 $250 2 400 3 500 4 600 5 600
1. What is the present (Year 0) value if the opportunitycost (discount) rate is 10%? 2. Add an outflow (cost) of $1,000 at Year 0. Whatis the present value (or net present value) of the steam? Help please... this is confusing. Thxs

Explanation / Answer

Year

Cash flows

PV factor at 10%

Present Value

0

$0

1

$0

1

$250

0.9091

$227.28

2

$400

0.8264

$330.56

3

$500

0.7513

$375.65

4

$600

0.683

$409.80

5

$600

0.6209

$372.54

Present Value

$1,715.83

(b)

Year

Cash flows

PV factor at 10%

Present Value

0

($1,000)

1

($1,000)

1

$250

0.9091

$227.28

2

$400

0.8264

$330.56

3

$500

0.7513

$375.65

4

$600

0.683

$409.80

5

$600

0.6209

$372.54

Net Present Value

$715.83

(a)

Year

Cash flows

PV factor at 10%

Present Value

0

$0

1

$0

1

$250

0.9091

$227.28

2

$400

0.8264

$330.56

3

$500

0.7513

$375.65

4

$600

0.683

$409.80

5

$600

0.6209

$372.54

Present Value

$1,715.83

(b)

Year

Cash flows

PV factor at 10%

Present Value

0

($1,000)

1

($1,000)

1

$250

0.9091

$227.28

2

$400

0.8264

$330.56

3

$500

0.7513

$375.65

4

$600

0.683

$409.80

5

$600

0.6209

$372.54

Net Present Value

$715.83

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