Consider the mixed streams of cash flows shown in the following table. YEAR 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% discount rate (b) Compare the calculated present values and discuss them in light of the fact that the undiscounted cash flows total $150,000 in each case.
Consider the mixed streams of cash flows shown in the following table. YEAR 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% discount rate (b) Compare the calculated present values and discuss them in light of the fact that the undiscounted cash flows total $150,000 in each case.
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
Problem 1PS
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Consider the mixed streams of cash flows shown in the following table.
YEAR 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
(b) Compare the calculated present values and discuss them in light of the fact that the undiscounted cash flows total $150,000 in each case.
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