(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 boat these thee investments are as follow What is the percent value of each of these thee investments if the appropriate discount rate is 13 percent? a. What is the present value of investment A at an annual discount rate of 13 percent? $ (Round to the nearest cent. ) b. What is the present value of investment B at an annual discount rate of 13 percent? $(Round to the nearest cent ) c. What is the present value of investment C at an annual discount rate of 13 percent? $(Round to the nearest cent.)

Explanation / Answer

Particulars Year PVF @ 13% Cash Flows A Cash Flows B Cash Flows C PV A PV B PV C Cash Flows 1                0.88 2000 1000 4000          1,769.91       884.96     3,539.82 Cash Flows 2                0.78 3000 1000 4000          2,349.44       783.15     3,132.59 Cash Flows 3                0.69 4000 1000 -4000          2,772.20       693.05 (2,772.20) Cash Flows 4                0.61 -5000 1000 4000       (3,066.59)       613.32     2,453.27 Cash Flows 5                0.54 5000 5000 14000          2,713.80    2,713.80     7,598.64 Total          6,538.76    5,688.27 13,952.12

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