Uneven Cash Flow Stream Find the present values of the following cash flow strea

Question

Uneven Cash Flow Stream

Find the present values of the following cash flow streams. The appropriate interest rate is 15%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)

Stream A $   
Stream B $   

What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent.
Stream A $   
Stream B $  

Year Cash Stream A Cash Stream B 1 $100 $300 2 400 400 3 400 400 4 400 400 5 300 100

Explanation / Answer

300*.4972=149.16

Stream A=1030.32

the value of each cash flow stream at a 0% interest rate

Stream A=1600

100 *0.4972=49.72

Stream B=1104.88

Stream B=1600

Year Cash Stream A Cash Stream B Pv Factor 1 $100*0.870=87 $300*0.870=261 2 400*0.7561=302.44 400*0.7561=302.44 3 400*.6575=263                   400*0.6575=263 4 400*.5718=228.72 400*0.5718=228.72 5

300*.4972=149.16

Stream A=1030.32

the value of each cash flow stream at a 0% interest rate

Stream A=1600

100 *0.4972=49.72

Stream B=1104.88

Stream B=1600

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