Question: 9. Use the Present Value of $1 table (Appendix B, Table A) to determine the present value of $1 received one year from now. Assume

9. Use the Present Value of $1 table (Appendix B, Table A) 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.

Requirements

R1. What is the total present value of the cash flows received over the five-year period?

R2. Could you characterize this stream of cash flows as an annuity? Why, or why not?

R3. Use the Present Value of Annuity of $1 table (Appendix B, Table B) to determine the present value of the same stream of cash flows. Compare your results to your answer to part 1.

R4. Explain your findings.

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