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A 100 dollar cash payment in 20 years and a discount rate of 5 percent gives you a specific present value. Consider instead a cash flow for 10 years and a discount rate of 10 percent. What would the payment need to be for the present values of the two cash flows to be the same?   A)100   B)97.76   C)96.80   D)103.21

A 100 dollar cash payment in 20 years and a discount rate of 5 percent gives you a specific present value. Consider instead a cash flow for 10 years and a discount rate of 10 percent. What would the payment need to be for the present values of the two cash flows to be the same?   A)100   B)97.76   C)96.80   D)103.21

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A 100 dollar cash payment in 20 years and a discount rate of 5 percent gives you a specific present value. Consider instead a cash flow for 10 years and a discount rate of 10 percent. What would the payment need to be for the present values of the two cash flows to be the same?

 

A)100

 

B)97.76

 

C)96.80

 

D)103.21

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