Question

In: Finance

Find the present values of the following cash flow streams at a 12% discount rate. Round...

  1. Find the present values of the following cash flow streams at a 12% discount rate. Round your answers to the nearest cent.
    0 1 2 3 4 5
    Stream A $0 $150 $450 $450 $450 $300
    Stream B $0 $300 $450 $450 $450 $150

    Stream A $  

    Stream B $  

  2. What are the PVs of the streams at a 0% discount rate?

    Stream A $  

    Stream B $  

Solutions

Expert Solution

Statement showing Cash flows Stream A Stream B
Particulars Time PVf 12% Amount PV
Cash flows                               -              1.0000                            -                               -  
Cash flows                          1.00            0.8929                   150.00                   133.93                  300.00                    267.86
Cash flows                          2.00            0.7972                   450.00                   358.74                  450.00                    358.74
Cash flows                          3.00            0.7118                   450.00                   320.30                  450.00                    320.30
Cash flows                          4.00            0.6355                   450.00                   285.98                  450.00                    285.98
Cash flows                          5.00            0.5674                   300.00                   170.23                  150.00                      85.11
PV of Cash flows                 1,269.18                1,317.99
b)
Statement showing Cash flows Stream A Stream B
Particulars Time PVf 0% Amount PV
Cash flows                               -              1.0000                            -                               -  
Cash flows                          1.00            1.0000                   150.00                   150.00                  300.00                    300.00
Cash flows                          2.00            1.0000                   450.00                   450.00                  450.00                    450.00
Cash flows                          3.00            1.0000                   450.00                   450.00                  450.00                    450.00
Cash flows                          4.00            1.0000                   450.00                   450.00                  450.00                    450.00
Cash flows                          5.00            1.0000                   300.00                   300.00                  150.00                    150.00
PV of Cash flows                 1,800.00                1,800.00

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