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 $1,000 $1,000 $5,000
2 2,000 1,000 5,000
3 3,000 1,000 (5,000)
4 -4,000 1,000 (5,000)
5 4,000 3,000 15,000
What is the present value of each of these three investments if the appropriate discount rate is 14 percent?
a. What is the present value of investment A at an annual discount rate of 14percent?
Homework Answers
Answer #1
Present Value of Cash Flows = 
r = 14% OR 0.14
Present Value of Cash Flows A = 
= 
= 4150.19613593
Present Value of Cash Flows B =
= 
= 4471.81829754
Present Value of Cash Flows C =
= 
= 9688.57355207
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