(Present value of an uneven stream of payments) You are given three investment a

Question

(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are shown in the popup window: Assuming a discount rate of 17 percent, find the present value of each investment (A,B,&C)

A. What is the present value of investment A at 17 percent annual discount rate?

B. What is the present value of investment B at 17 percent annual discount rate?

C. What is the present value of investment C at 17 percent annual discount rate?

INVESTMENT END OF YEAR A B C 1 $14,000 $14,000 2 14,000 3 14,000 4 14,000 5 14,000 $14,000 6 14,000 70,000 7 14,000 8 14,000 9 14,000 10 14,000 14,000

Explanation / Answer

a. 14000X 3.199= 44786

b. 14000X (4.569- 2.743)= 25,564

c. 14000X0.855+ 70,000X0.390+ 14000X0.208= 11970+ 27,300+ 2912= 42,182

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