Question: Which cash flow has the greatest present value if your discount rate is 13%? A. Five Annual payments of $2800 - the first payment occurs

Which cash flow has the greatest present value if your discount rate is 13%?

A. Five Annual payments of $2800 - the first payment occurs one year from today

B. A perpetual stream of annual payments starting at $500 in one year and increasing at 5% per year thereafter.

C. A lump sum payment of $25,000 at the end of 10 years.

D. A lump sum payment of $10,000 today.

E. A perpetual stream of annual payments of $1,000 starting in one year.

Can you please show work of how you calculated the value for each line! Thanks!

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!