Q12) A-B

Present value: Mixed streams. Consider the mixed streams of cash flows shown in the following table, a. Find the present value of each stream using a 5% discount rate. b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $30,000 in each case. Is there some discount rate at which the present values of the two streams would be equal? \begin{tabular}{crr} \hline & \multicolumn{2}{c}{ Cash flow stream } \\ \cline { 2 - 3 } Year & \multicolumn{1}{c}{A} & \multicolumn{1}{c}{ B } \\ \hline 0 & $22,500 & $7,500 \\ 1 & $18,750 & $11,250 \\ 2 & $15,000 & $15,000 \\ 3 & $11,250 & $18,750 \\ 4 & $7,500 & $22,500 \\ Totals & $30,000 & $30,000 \\ \hline \end{tabular} Present value: Mixed streams. Consider the mixed streams of cash flows shown in the following table, a. Find the present value of each stream using a 5% discount rate. b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $30,000 in each case. Is there some discount rate at which the present values of the two streams would be equal? \begin{tabular}{crr} \hline & \multicolumn{2}{c}{ Cash flow stream } \\ \cline { 2 - 3 } Year & \multicolumn{1}{c}{A} & \multicolumn{1}{c}{ B } \\ \hline 0 & $22,500 & $7,500 \\ 1 & $18,750 & $11,250 \\ 2 & $15,000 & $15,000 \\ 3 & $11,250 & $18,750 \\ 4 & $7,500 & $22,500 \\ Totals & $30,000 & $30,000 \\ \hline \end{tabular}