you have two assets and must calculate their values today based on their payment streams and...

you have two assets and must calculate their values today based on their payment streams
and required returns.
asset 1 return of 9% and will produce stream of $300 starting in 1 year and continue indefinitely. Asset 2 has a return of 7% and will produce a cadh flow of 1,400 in 1 year , $ 1300 in 2 years and $850 in 3 years.

Expert Solution

ASSET 1 VALUE TODAY = CASH FLOW / REQUIRED RETURN

= 300 / 9%

= $ 3333.33

ASSET 2 VALUE TODAY = $ 3137.73

Year	Project Cash Flows (i)	DF@ 7%	DF@ 7% (ii)	PV of Project A ( (i) * (ii) )

1	1400	1/((1+7%)^1)	0.935	1,308.41
2	1300	1/((1+7%)^2)	0.873	1,135.47
3	850	1/((1+7%)^3)	0.816	693.85
		NPV		3,137.73

ekkarill92 answered 5 months ago

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