Question

# You are given three investment alternatives to analyze. The cash flows from these three investments are...

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

 End of Year A B C 1 10,000 10,000 2 10,000 3 10,000 4 10,000 5 10,000 10,000 6 10,000 50,000 7 10,000 8 10,000 9 10,000 10 10,000 10,000

Assuming an annual discount rate of 20 ​percent, find the present value of each investment.

#### Homework Answers

Answer #1
 Statement Computing Present values In \$ Year Investment A Investment B Investment C Discounting factor @20% Discounted Values Investment A Discounted Values Investment B Discounted Values Investment C 1 10000.00 0.00 10000.00 0.833 8333.33 0.00 8333.33 2 10000.00 0.00 0.00 0.694 6944.44 0.00 0.00 3 10000.00 0.00 0.00 0.579 5787.04 0.00 0.00 4 10000.00 0.00 0.00 0.482 4822.53 0.00 0.00 5 10000.00 10000.00 0.00 0.402 4018.78 4018.78 0.00 6 0.00 10000.00 50000.00 0.335 0.00 3348.98 16744.90 7 0.00 10000.00 0.00 0.279 0.00 2790.82 0.00 8 0.00 10000.00 0.00 0.233 0.00 2325.68 0.00 9 0.00 10000.00 0.00 0.194 0.00 1938.07 0.00 10 0.00 10000.00 10000.00 0.162 0.00 1615.06 1615.06 Present values 29906.12 16037.38 26693.29
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