Homework: Assignment 3 Score: 0 of 10 pts P5-31 (similar to) Save 4 of 10 (8 com

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Homework: Assignment 3 Score: 0 of 10 pts P5-31 (similar to) Save 4 of 10 (8 complete) Hw Score: 73.33%, 73.33 of 100 pts EQuestion Help Present value-Mixed streams Consider the mixed streams of cash fows shown in the following table, E a Find the present value of each stream using a 13% discount rate. b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $100,000 in each case The present value of the cash tows of stream Ais (Round to the nearest dollar.) Enter your answer in the answer box and then click Check Answer Clear All

Explanation / Answer

1. Present value of A=30000/1.13+25000/1.13^2+20000/1.13^3+15000/1.13^4+10000/1.13^5=74615.723

2. Present value of B=10000/1.13+15000/1.13^2+20000/1.13^3+25000/1.13^4+30000/1.13^5=66073.527

We see the present value of A is higher because even though total cash flow is same but present valuebis higher because higher cash flows is being realized in the initial years leading to high present value

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