Question

You are given three investment alternatives to analyze. The cash flows from these three investments are as​ follows:

Investment End of Year:

#1: A. $1,000 B. $3,000 C. ​$5,000 

# 2: A. $2,000 B. $3,000 C. $5,000 

#3: A. $3,000 B. $3,000 C. ( $5,000 )  

#4. A. ( $4,000 ) B. $3,000 C. ( $5,000 )  

#5. A. $4,000 B. $5,000 C. $15,000.

What is the present value of each of these three investments if the appropriate discount rate is 9 ​percent?

Answer 1

Year	A	B	C	PV factor @ 9%	PV of cash flow A	PV of cash flow B	PV of cash flow C
1	1000	3000	5000	0.917431	917.4311927	2752.293578	4587.155963
2	2000	3000	5000	0.841680	1683.359987	2525.03998	4208.399966
3	3000	3000	-5000	0.772183	2316.55044	2316.55044	-3860.9174
4	-4000	3000	-5000	0.708425	-2833.700844	2125.275633	-3542.126055
5	40	5000	15000	0.649931	25.99725545	3249.656931	9748.970794
				PV Total	2109.64	12968.82	11141.48

-----------------------------------------------------------------------------------------------------------------

Hope this answer your query.

Feel free to comment if you need further assistance. J