(Present value of an uneven stream of payments) You are given three investment a

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: What is the present value of each of these three investments if the appropriate discount rate is 12 percent? a. What is the present value of investment A at an annual discount rate of 12 percent? $ (Round to the nearest cent.) b. What is the present value of investment B at an annual discount rate of 12 percent? $ (Round to the nearest cent.) e. What is the present value of investment C at an annual discount rate of 12 percent? (Round to the nearest cent)

Explanation / Answer

A.

B.

C.

End of Year Present Value 1 CF1 2000 1786 2 CF2 3000 2392 3 CF3 4000 2847 4 CF4 -5000 -3178 5 CF5 5000 2837 Discount Rate 12% Net Present Value = 6684

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