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Find the present values of the following cash flow streams. The appropriate interest rate is 9%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0

Answer :

Answer:

a. Find the present values of the following cash flow streams. The appropriate interest rate is 6%. Round your

answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF0 = 0.

 Year                      Cash Stream A              Cash Stream B

          1                             $100                                  $300

          2                               400                                   400

          3                               400                                   400

          4                               400                                   400

          5                               300                                   100

Explanation:

Please note that unlike the question above, I used an interest rate of 9% since that’s what you asked for so my answer will be different from that of the question above since it uses 6%

Using a financial calculator (specifically BAII plus).

The net present value of the cash stream A is $1,133.

While that of cash stream B is $1,269

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