Question

Present value Mixed streams Consider the mixed streams of cash flows shown in the folowing table a. Find te present value of each stream using a 7% discount rate. b. Compare the caloulated present values and discuss them in light of S the undnoounted cash fows totaling $50,000 in each case, Is thore some discount rate at which the present values of the two streams would be The present value of the cash fows of stream B i(Round to the nearest dollar b. Compare the calsuilated present values and disouss them in light of the undiscounrted cash fows tobaling 50,000 in each case. (Select the best answer below) O A. Cash tow stream A, with a present vakue of $38.383, s higher than cash ow stream B's present value of $48,7e0 because the peative cash intows ocour in A in the early years when their present value is Oa. cash for stream A, we, a presen ate of S38.3a·lower ran cashflow sneam Es present value of $48,760 because the negatve cash it w occurs î1Ainthe early years, while the positive cash flows are received further in the future cash footream A wit, a present eats of sse.38s, is highwthan ash flow streamEvpresent vaue of$48,760 because the negative cash-occurs in Ainte bler greater, while the negative cash fows are received in the earier years О с. s O D. Cash fow stream A, with a present value of $48,780, is higher than cash flow stream B's present value of $38,383 because the positive cash infiows ocour in A in the greaher, while the negative cash flows is received further in the future. 5 8

please help and answer each part!! ill give feedback!

Answer 1

1: Present value of Stream A = 38383.35

2: Present value of stream B = 48760.07

3: Option B

A is false since PV of stream A is lesser.

B is TRUE since PV of stream A is lower than that of Stream B. The difference is that the negative cash outflows occur initially in Stream A than in B.

C and D are false since the PV of stream A is lower than B.

WORKINGS