4.11.2 - Mixed Streams with an Initial CashFlowYou receive $10,000 now for an investment...

4.11.2 - Mixed Streams with an Initial Cash Flow
You receive $10,000 now for an investment that will give you cash flows of $1000 in one year, $2000 in two years, $3000 in three years, and $4000 in four years. If the discount rate is 5% then what is the PV of this investment? (Enter the answer in dollar format without $ sign or thousands comma -> 3519.23 and not $3,519.23 or 3,519.23)

4.11.3 - Mixed Streams with Repeating Cash Flows
You receive $10,000 now for an investment that will return cash flows of $2,000 per year for five years and then $3,000 per year for another 5 years. What is the present value if the discount rate is 5%? (Enter the answer in dollar format without $ sign or thousands comma -> 3519.23 and not $3,519.23 or 3,519.23)

Solutions

Expert Solution

4.11.2.The question is solved by computing the net present value.

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= $10,000.
Cash flow for all the years should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow, press the NPV button and enter the discount rate of 5%.
Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 5% discount rate is $18,648.76.

4.11.3.The question is solved by computing the net present value.

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= $10,000.
Cash flow for all the years should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow, press the NPV button and enter the discount rate of 5%.
Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 5% discount rate is $28,835.73.

jeff jeffy answered 2 years ago

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