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Given the mixed streams of cash flows shown in the following table, answer parts (a) and (b):

Year

Cash Flow Stream

A

B

1

$ 50,000

$ 10,000

2

40,000

20,000

3

30,000

30,000

4

20,000

40,000

5

10,000

50,000

Totals

$ 150,000

$ 150,000


a. Find the present value of each stream, using a 15 percent discount rate.

b. Compare the calculated present values, and discuss them in light of the fact that the undiscounted total cash flows amount to $150,000 in each case.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92088135

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