# Question: Use Table A Present Value of 1 to determine the

Use Table A: Present Value of $1 to determine the present value of $1 received one year from now. Assume a 14% interest rate. Use the same table to find the present value of $1 received two years from now. Continue this process for a total of five years.

a. What is the total present value of the cash flows received over the five-year period?

b. Could you characterize this stream of cash flows as an annuity? Why or why not?

c. Use Table B: Present Value of Annuity of $1 to determine the present value of the same stream of cash flows. Compare your results to your answer in Part a.

d. Explain your findings.

a. What is the total present value of the cash flows received over the five-year period?

b. Could you characterize this stream of cash flows as an annuity? Why or why not?

c. Use Table B: Present Value of Annuity of $1 to determine the present value of the same stream of cash flows. Compare your results to your answer in Part a.

d. Explain your findings.

**View Solution:**## Answer to relevant Questions

Skyline Music is considering investing $750,000 in private lesson studios that will have no residual value. The studios are expected to result in annual net cash inflows of $100,000 per year for the next 10 years. Assuming ...Which of the following purchases would be considered capital investments? a. Land for the new administrative offices will cost $250,000. b. Salary costs for the upcoming year are projected to be $2,000,000. c. The cost of ...Your best friend just received a gift of $5,000 from his favourite aunt. He wants to save the money to use as starter money after school. He can (1) invest it risk-free at 3%, (2) take on moderate risk at 8%, or (3) take on ...Refer to the Allegra Data Set. Calculate the DVR projectâ€™s payback period. If the DVR project had a residual value of $100,000, would the payback period change? Explain and recalculate if necessary. Does this investment ...Walken Hardware is adding a new product line that will require an investment of $1,418,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $300,000 the first year, $280,000 ...Post your question