You are given three investment alternatives to analyze. The cash flows from thes

Question

You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: What is the present value of each of these three investments if the appropriate discount rate is 13 percent? What is the present value of investment A at an annual discount rate of 13 percent? dollar (Round to the nearest cent.) What is the present value of investment B at an annual discount rate of 13 percent? dollar (Round to the nearest cent.) What is the present value of investment C at an annual discount rate of 13 percent? dollar (Round to the nearest cent.)

Explanation / Answer

Particualrs Year PVF @ 13% A B C PV A PV B PV C Cash Flows 1                0.88 2000 3000 4000     1,769.91       2,654.87         3,539.82 Cash Flows 2                0.78 3000 3000 4000     2,349.44       2,349.44         3,132.59 Cash Flows 3                0.69 4000 3000 -4000     2,772.20       2,079.15       (2,772.20) Cash Flows 4                0.61 -5000 3000 -4000 (3,066.59)       1,839.96       (2,453.27) Cash Flows 5                0.54 5000 5000 14000     2,713.80       2,713.80         7,598.64 Present Value     6,538.76     11,637.21         9,045.57

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