a. Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note, if you do work with the cash flow register, then you must enter CF₀ = 0.)

b. What is the value of each cash flow stream at a 0% interest rate?

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Year 1 2 3 4 5 Cash Stream A $100 400 400 400 300 Cash Stream B $300 400 400 400 100