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.
| 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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