Find the present value of the streams of cash flows shown in the following table

Question

Find the present value of the streams of cash flows shown in the following table.

A                                               B                                                C

Year Cash Flows            Year    Cash Flows                     Year      Cash Flows

1       -$2000                   1            $10,000                         1-5        $10,000/yr

2         3000                  2-5             5,000/yr                       6-10          8,000/yr

3         4000                    6              7,000

4         6000

5         8000       

Explanation / Answer

note : discount rate is not given. assume we will take discount @ 10%

Year discount @10% A cash flows PVCF B cash flows PVCF C cash flows PVCF

1 0.909 -2000 (1818) 10000 9090 10000 9090

2 0.826 3000 2478 5000 4130 10000 8260

3 0.751 4000 3004 5000 3755 10000 7510

4 0.683 6000 4098 5000 3415 10000 6830

5 0.621 8000 4968 5000 3105 10000 6210

6 0.564 7000 3948 8000 4512

7 0.513 8000 4104

8 0.466 8000 3728

9 0.424 8000 3392

10 0.385 8000 3080 .

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