Question
(Related to Checkpoint 6.6) (Present value of annuities and complex cash flows ) You are given...
(Related to Checkpoint 6.6)
(Present value of annuities and complex cash flows )
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 | $16,000 | $16,000 | |
| 2 | 16000 | ||
| 3 | 16000 | ||
| 4 | 16000 | ||
| 5 | 16000 | $16,000 | |
| 6 | 16000 | 80000 | |
| 7 | 16000 | ||
| 8 | 16000 | ||
| 9 | 16000 | ||
| 10 | 16000 | 16000 |
Assuming an annual discount rate of 15 percent, find the present value of each investment.
| a. What is the present value of investment A at an annual discount rate of 15 percent? |
| b. What is the present value of investment B at an annual discount rate of 15 percent? |
| c. What is the present value of investment C at an annual discount rate of 15 percent? |
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