# A Find the present value of the following cash flows at 2%, 5%, and 9%, T=6 |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|

## Question:

__A__

Find the present value of the following cash flows at 2%, 5%, and 9%,

T=6

- |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|

30 30 30 30 30 30

1000

T=10

- |---------|---------|--------|--------|--------|--------|---------|--------|--------|---------|

30 30 30 30 30 30 30 30 30 30

1000

T=6

- |---------|---------|--------|---------|-------|--------|--------|--------|--------|--------|

50 50 50 50 50 50

1000

T=10

- |---------|---------|--------|--------|--------|---------|--------|--------|--------|---------|

50 50 50 50 50 50 50 50 50 50

1000

T=6

- |---------|---------|--------|--------|--------|---------|--------|--------|--------|--------|

80 80 80 80 80 80

1000

T=10

- |---------|---------|--------|--------|--------|--------|---------|--------|--------|--------|

80 80 80 80 80 80 80 80 80 80

1000

__Part B__

__ __

For each of the sets of cash flows, and using the value you derived at a 5%, do the following

Multiply each cash flow by the time period associated with the cash flow. For example for the first set of cash flow you would:

30 * 1

30 * 2

30 * 3

30 * 4

30 * 5

1030 * 6

Divide each product you just calculated by (1.05)^{time}

30 / 1.05

60 / 1.1025

90 / 1.15762

120 / 1.21551

150 / 1.27628

6180 / 1.34010

Add the numbers you just calculated **4988.602954**

Divide that sum by whatever you got in part A for the first set of cash flows using the 5% rate of **5.552228552**

Repeat these steps for the remaining sets of cash flows limiting your analysis to the 5% rate for present value.

Discuss what you observe in Part A. What do you observe in Part B?

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