Question. (present value of an uneven stream of payments) You are given three investment alternatives to analyze.
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Question.
(present value of an uneven stream of payments) You are given three investment
alternatives to analyze. The cash flows from these three investments are as follows:
Investment
End of Year | A | B | C |
1 | $3,000 | $1,000 | $5,000 |
2 | 4,000 | 1,000 | 5,000 |
3 | 5,000 | 1,000 | (5,000) |
4 | -6,000 | 1,000 | (5,000) |
5 | 6,000 | 4,000 | 15,000 |
What is the present value of each of these three investments if the appropriate discount rate is
9 percent?
a. What is the present value of investment A at an annual discount rate of 9 percent?
$___ (Round to the nearest cent.)
b. What is the present value of investment B at an annual discount rate of 9 percent?
$___ (Round to the nearest cent.)
c. What is the present value of investment C at an annual discount rate of 9 percent?
$___ (Round to the nearest cent.)
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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