(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 as follows Investment End of Year $ 3,000 4,000 5,000 (6,000) 6,000 $2,000 2,000 2,000 2,000 4,000 $ 5,000 5,000 (5,000) (5,000) 15,000 What is the present value of each of these three investments if the appropriate discount rate is 16 percent? a. What is the present value of investment A at an annual discount rate of 16 percent? Round to the nearest cent.)

Explanation / Answer

Present value = Cash flow / (1+r)n

Where r is the discount rate and n is number of years.

Computation of present value of investment A-

Computation of PV of investment B-

Computation of PV of investment C-

s.no Present values 1 2586.21 2 2972.65 3 3203.28 4 (3313.74) 5 2856.67 Total 8305.07

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.