Question

Using the information provided in the following table, find the value of each asset.

Cash flow
Asset	end of year	Amount	Appropriate required return
A	1	$6,000	13%
	2	6,000
	3	6,000
B	1 through ∞	$200	10%
C	1	$0	12%
	2	$0
	3	$0
	4	$0
	5	35,000
D	1 through 5	$2,500	12%
	6	8,500
E	1	$3,000	19%
	2	2,000
	3	8,000
	4	7,000
	5	4,000
	6	1,000

Answer 1

	13.00%
Cash flows	Year	Discounted CF
-	0	0.00
6,000.00	1	5309.73
6,000.00	2	4698.88
6,000.00	3	4158.30

value of A = 14,166.92

value of B = 200/0.10 = 2000

value of C = 35,000/1.12⁵ = 19,859.94

	12.00%
Cash flows	Year	Discounted CF
-	0	0.00
2,500.00	1	2232.14
2,500.00	2	1992.98
2,500.00	3	1779.45
2,500.00	4	1588.80
2,500.00	5	1418.57
8,500.00	6	4306.36

value of D = 13,318.31

	19.00%
Cash flows	Year	Discounted CF
-	0	0.00
3,000.00	1	2521.01
2,000.00	2	1412.33
8,000.00	3	4747.33
7,000.00	4	3490.68
4,000.00	5	1676.20
1,000.00	6	352.14

value of E = 14,199.69