Value of mixed streams Find the present value of the streams of cash flows shown

Question

Value of mixed streams Find the present value of the streams of cash flows shown in the following table Assume that the firm's opportunity cost is 12% a. The present value of stream Ais (Round to the nearest dollar) i Data Table (Click on the lcon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Cash Flow $11,000 $5, 100fyr $7,200 Year Cash Flow 1-5 $10,000/y 6-10 $7,900y Year Cash Flow $2,000 $2,900 $4,100 $5,900 $8,100 Year 2-5 Print Done

Explanation / Answer

a. Present Value of Stream A = -2,000 * 1/(1.12) ^ 1+ $ 2,900 * 1/(1.12) ^ 2 + $ 4,100* 1/(1.12) ^ 3 + $ 5,900 * 1/(1.12) ^ 4 + $ 8,100* 1/(1.12) ^5

= $ 11,790.16

b. Present Value of Stream B = $ 11,000* 1/(1.12) ^ 1 + $ 5,100 * 1/(1.12) ^ 2+ * $5,100 * 1/(1.12) ^3 + 5,100 * 1/(1.12) ^4+ 5,100 * 1/(1.12) ^5+ $ 7,200 * 1/(1.12) ^6

= $ 27,299.96

c. Present Value of Stream C = $ 10,000 *1/(1.12) ^ 1 + $ 10,000 *1/(1.12) ^ 2+ $ 10,000 *1/(1.12) ^ 3+ $ 10,000 *1/(1.12) ^ 4+ $ 10,000 *1/(1.12) ^ 5+ $ 7,900 *1/(1.12) ^ 6+$ 7,900 *1/(1.12) ^ 7+ $ 7,900 *1/(1.12) ^ 8+ $ 7,900 *1/(1.12) ^ 9 + $ 7,900 *1/(1.12) ^ 10

= $ 52,206.79

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