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3 years ago

UNEVEN CASH FLOW STREAM

Business

1 answer:

vladimir2022 [97]3 years ago

4 0

Answer:

Present Value

Stream A $1,251.247

Stream B $1,300.316

Explanation:

<em>The present value of a future sum is the amount that would be invested today at the prevailing interest rate to have the sum</em>

Stream A

(100 × 1.08^9-1) + (400× 1.08^-2) + (400× 1.08^-3) + (400× 1.08^-4) + (300× 1.08^-5) = $1,251.247

Stream B

(300 × 1.08^9-1) + (400× 1.08^-2) + (400× 1.08^-3) + (400× 1.08^-4) + (100× 1.08^-5) = $1,300.316

Present Value

Stream A $1,251.247

Stream B $1,300.316

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