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Consider the following cash flow stream. What is the correct way to find the present value of this cash flow stream at a 10% discount rate?
0 1 2 3 4 5 6 7 8 9 10
|----------|----------|----------|----------|---------|----------|----------|----------|----------|----------|
PV=? $30 $30 $30 $30 $25 $25 $25 $25 $25 $25
A.
PV = $30 [PVIFA(10%, 4)] + $25 [PVIFA(10%, 6)]
B.
PV = $30 [PVIFA(10%, 10)] - $5 [PVIFA(10%, 4)]
C.
PV = $25 [PVIFA(10%, 10)] + $5 [PVIFA(10%, 4)]
D.
PV = $30 [PVIFA(10%, 4)]/(1.10)6 + $25 [PVIFA(10%, 6)]
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