Question

SHOW ALL WORK PLEASE!!

You are given the following cash flow information. The appropriate discount rate is 6 percent for Year 0 to end of year 4, 5 percent for end of year 4 to end of year 10, and 4 percent for end of year 10 to end of year 15. Payments are received at the end of each year.

Year	Amount each year
1–4	$15,000
5–10 11-15	$30,000 $45,000

What is the present value of the income stream above?

Answer 1

Pv of cashflow is calculated in excel
=Pv(rate,nper,pmt,fv)

Present value of Income stream = 312587.24

Year	Cashflow	Discount rate	Pv of cashflow
1	15,000.00	6%	14150.94
2	15,000.00	6%	13349.95
3	15,000.00	6%	12594.29
4	15,000.00	6%	11881.40
5	30,000.00	5%	23505.78
6	30,000.00	5%	22386.46
7	30,000.00	5%	21320.44
8	30,000.00	5%	20305.18
9	30,000.00	5%	19338.27
10	30,000.00	5%	18417.40
11	45,000.00	4%	29231.14
12	45,000.00	4%	28106.87
13	45,000.00	4%	27025.83
14	45,000.00	4%	25986.38
15	45,000.00	4%	24986.90
Pv of Cashflow	312587.2413