Question

. What is the present value of the following set of cash​ flows, discounted at

10.8 %10.8%

per​ year?

Year	1	2	3	4	5
CF	$ 12$12	$ 22$22	$ 32$32	$ 42$42	$ 52$52

b. What is the present value of the following set of cash​ flows, discounted at

10.8 %10.8%

per​ year?

Year	1	2	3	4	5
CF	$ 52$52	$ 42$42	$ 32$32	$ 22$22	$ 12$12

c. Each set contains the same cash flows

​($ 12$12​,

$ 22$22​,

$ 32$32​,

$ 42$42​,

$ 52$52​),

so why is the present value​ different?

a. What is the present value of the following set of cash​ flows, discounted at

10.8 %10.8%

per​ year?

Year	1	2	3	4	5
CF	$ 12$12	$ 22$22	$ 32$32	$ 42$42	$ 52$52

The present value of the cash flow stream is

​$nothing.

​(Round to the nearest​ cent.)b. What is the present value of the following set of cash​ flows, discounted at

10.8 %10.8%

per​ year?

Year	1	2	3	4	5
CF	$ 52$52	$ 42$42	$ 32$32	$ 22$22	$ 12$12

The present value of the cash flow stream is

nothing.

​(Round to the nearest​ cent.)c. Each set contains the same cash flows

​($ 12$12​,

$ 22$22​,

$ 32$32​,

$ 42$42​,

$ 52$52​),

so why is the present value​ different?  ​(Select the best choice​ below.)

A.The present value in part

​(b​)

is higher because the larger cash flows occur sooner.

B.The present value in part

​(a​)

is higher because the larger cash flows occur sooner.

C.The present value in part

​(b​)

is lower because the larger cash flows occur sooner.

D.The present value in part

​(a​)

is lower because the larger cash flows occur sooner.

Answer 1

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