Homework Help Question & Answers

Buestion . .. What is the present value of the following set of cash flows, discounted...


Buestion . .. What is the present value of the following set of cash flows, discounted at 100% per year? Year CI 1 $10 522 4
Buestion . .. What is the present value of the following set of cash flows, discounted at 100% per year? Year CI 1 $10 522 4 565 5 b. What is the present of the following set of cash flows, discounted at 100% per year? Year CF 1 558 2 5-46 531 4 522 590 5 510 c. Each set contains the same cash flow (510, 522 54 546 558)so why is the present value different? .. What is the present value of the following cash flows, discounted at 100% per year? Year CH 1 $10 2 4 31 5 558 The per value of the cash low streams Round to the rest cont
0 0
Next > < Previous
ReportAnswer #1

a.Present value=Cash flows*Present value of discounting factor(rate%,time period)

=10/1.108+22/1.108^2+34/1.108^3+46/1.108^4+58/1.108^5

=$117.19(Approx)

b.Present value=Cash flows*Present value of discounting factor(rate%,time period)

=58/1.108+46/1.108^2+34/1.108^3+22/1.108^4+10/1.108^5

=$135.4(Approx)

c.Present value of cash flows is different because of timing of cash flows ie the year in which such cash flows are arising.Given the discount rate;present value of $10 occurring at t=1 would not be the same as present value of $10 occurring at t=5.Higher the time period lower would be the present value of cash flow and vice-versa.

It is to be noted that if the discount rate would have been 0% the present value under both cases would have been same

Know the answer?
Add Answer to:
Buestion . .. What is the present value of the following set of cash flows, discounted...
Your Answer: Your Name: What's your source?
Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
Free Homework App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.