Question

# Find the present values of the following cash flow streams at an 8% discount rate. Do...

1. Find the present values of the following cash flow streams at an 8% discount rate. Do not round intermediate calculations. Round your answers to the nearest cent.
 0 1 2 3 4 5
 Stream A \$0 \$100 \$400 \$400 \$400 \$300 Stream B \$0 \$300 \$400 \$400 \$400 \$100

Stream A: \$

Stream B: \$

2. What are the PVs of the streams at a 0% discount rate? Round your answers to the nearest dollar.

Stream A: \$

Stream B: \$

Discount Rate = 8.00%

Stream A:

Present Value = \$100/1.08 + \$400/1.08^2 + \$400/1.08^3 + \$400/1.08^4 + \$300/1.08^5
Present Value = \$1,251.25

Stream B:

Present Value = \$300/1.08 + \$400/1.08^2 + \$400/1.08^3 + \$400/1.08^4 + \$100/1.08^5
Present Value = \$1,300.32

Discount Rate = 0.00%

Stream A:

Present Value = \$100 + \$400 + \$400 + \$400 + \$300
Present Value = \$1,600.00

Stream B:

Present Value = \$300 + \$400 + \$400 + \$400 + \$100
Present Value = \$1,600.00