Question

UNEVEN CASH FLOW STREAM

1. Find the present values of the following cash flow streams at a 9% discount rate. Round your answers to the nearest cent.

   0

   1

   2

   3

   4

   5

   Stream A	$0	$150	$400	$400	$400	$300
   Stream B	$0	$300	$400	$400	$400	$150

   Stream A $  

   Stream B $  

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

   Stream A $  

   Stream B $  

Answer 1

Ans a) Stream A $ 1261.51

Stream B $ 1301.63

b) Stream A: $ 1650

Stream B: $ 1650

STREAM A
Year	Project Cash Flows (i)	DF@ 9%	DF@ 9% (ii)	PV of Project ( (i) * (ii) )	DF@ 0% (ii)	PV of Project A ( (i) * (ii) )
0	0	1	1	-	1	-
1	150	1/((1+9%)^1)	0.917	137.61	1.000	150.00
2	400	1/((1+9%)^2)	0.842	336.67	1.000	400.00
3	400	1/((1+9%)^3)	0.772	308.87	1.000	400.00
4	400	1/((1+9%)^4)	0.708	283.37	1.000	400.00
5	300	1/((1+9%)^5)	0.650	194.98	1.000	300.00
		NPV		1,261.51	NPV	1,650.00

STREAM B
Year	Project Cash Flows (i)	DF@ 9%	DF@ 9% (ii)	PV of Project ( (i) * (ii) )	DF@ 0% (ii)	PV of Project A ( (i) * (ii) )
0	0	1	1	-	1	-
1	300	1/((1+9%)^1)	0.917	275.23	1.000	300.00
2	400	1/((1+9%)^2)	0.842	336.67	1.000	400.00
3	400	1/((1+9%)^3)	0.772	308.87	1.000	400.00
4	400	1/((1+9%)^4)	0.708	283.37	1.000	400.00
5	150	1/((1+9%)^5)	0.650	97.49	1.000	150.00
		NPV		1,301.63	NPV	1,650.00