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eBook Problem 4-14 Uneven Cash Flow Stream Find the present values of the following cash flow...

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Finance

eBook Problem 4-14 Uneven Cash Flow Stream Find the presentvalues of the following cash flow streams. The appropriate interestrate is 6%. Round your answers to the nearest cent. (Hint: It isfairly easy to work this problem dealing with the individual cashflows. However, if you have a financial calculator, read thesection of the manual that describes how to enter cash flows suchas the ones in this problem. This will take a little time, but theinvestment will pay huge dividends throughout the course. Notethat, when working with the calculator's cash flow register, youmust enter CF0 = 0. Note also that it is quite easy to work theproblem with Excel, using procedures described in the Chapter 4Tool Kit.) Year Cash Stream A Cash Stream B 1 $100 $300 2 400 400 3400 400 4 400 400 5 300 100 Stream A $ Stream B $ What is the valueof each cash flow stream at a 0% interest rate? Round your answersto the nearest cent. Stream A $ Stream B $


Hii figured thos one out. but thank you

Answer & Explanation Solved by verified expert
4.4 Ratings (945 Votes)

Year Cash FLow Stream A Present Value of Stream A(Cash Flow/1.06^year) Cash Flow Stream B Present Value of Stream B(Cash Flow/1.06^year)
1 $                     100.00 $                                  94.34 $                    300.00 $                               283.02
2 $                     400.00 $                                356.00 $                    400.00 $                               356.00
3 $                     400.00 $                                335.85 $                    400.00 $                               335.85
4 $                     400.00 $                                316.84 $                    400.00 $                               316.84
5 $                     300.00 $                                224.18 $                    100.00 $                                  74.73
NPV (Total) $                            1,327.20 NPV (Total) $                            1,366.43

Hence, NPV value of cash flow stream A is 1327.2 and for stream B $1366.43
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