Question

UNEVEN CASH FLOW STREAM

Find the present values of the following cash flow streams at a 6% discount rate. Round your answers to the nearest cent.

0

1

2

3

4

5

Stream A	$0	$100	$450	$450	$450	$300
Stream B	$0	$300	$450	$450	$450	$100

Stream A $  

Stream B $  

What are the PVs of the streams at a 0% discount rate?

Stream A $  

Stream B $  

Answer 1

A.

Year	Cash flow B	Cash flow B	PV factor @ 6%	PV of cash flow A	PV of cash flow A
0
1	100	300	0.94340	94.34	283.02
2	450	450	0.89000	400.50	400.50
3	450	450	0.83962	377.83	377.83
4	450	450	0.79209	356.44	356.44
5	300	100	0.74726	224.18	74.73
			Total	1453.29	1492.51

PV of A = 1453.29

PV of B = 1492.51

B.

IN second question the discount rate is 0, so PV will be equal to cash flows

PV of A = 1750

PV of B = 1750