Question

# Find the present values of the following cash flow streams at a 5% discount rate. Round...

Find the present values of the following cash flow streams at a 5% discount rate. Round your answers to the nearest cent.

 0 1 2 3 4 5
 Stream A \$0 \$150 \$350 \$350 \$350 \$300 Stream B \$0 \$300 \$350 \$350 \$350 \$150

Stream A \$

Stream B \$

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

Stream A \$

Stream B \$

Present Value at 5% Discount Rate :

Stream A = \$ 1,285.66

Stream B= \$ 1,310.99

Note :

Stream A = \$ 150 * 1/(1.05)^ 1 + \$ 350* 1/(1.05)^ 2 + \$ 350 * 1/(1.05)^ 3 + \$ 350* 1/(1.05)^ 4 + \$ 300* 1/(1.05)^ 5

= \$ 1,285.66

Stream B =

=\$ 300 * 1/(1.05)^ 1 + \$ 350* 1/(1.05)^ 2 + \$ 350 * 1/(1.05)^ 3 + \$ 350* 1/(1.05)^ 4 + \$ 150* 1/(1.05)^ 5

= \$ 1,310.99

Present Value at 0% Discount Rate :

Stream A = \$ 1,500.00

Stream B= \$ 1,500.00

Note :

Stream A = \$ 150 * 1/(1.00)^ 1 + \$ 350* 1/(1.00)^ 2 + \$ 350 * 1/(1.00)^ 3 + \$ 350* 1/(1.00)^ 4 + \$ 300* 1/(1.00)^ 5

= \$ 1,500.00

Stream B =

=\$ 300 * 1/(1.00)^ 1 + \$ 350* 1/(1.00)^ 2 + \$ 350 * 1/(1.00)^ 3 + \$ 350* 1/(1.00)^ 4 + \$ 150* 1/(1.00)^ 5

= \$ 1,500.00

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