In: Finance
(Present
value of an uneven stream of
payments)
You are given three investment alternatives to analyze. The cash flows from these three investments are as follows:
Investment |
|||||||||
End of Year |
A |
B |
C |
||||||
1 |
$ |
2,000 |
$ |
2,000 |
$ |
5,000 |
|||
2 |
|
3,000 |
2,000 |
5,000 |
|||||
3 |
|
4,000 |
2,000 |
−5,000 |
|||||
4 |
|
(5,000) |
2,000 |
(5,000) |
|||||
5 |
|
5,000 |
5,000 |
|
15,000 |
What is the present value of each of these three investments if the appropriate discount rate is
10 percent?