Question

Uneven Cash Flow Stream

1. 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. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)

   Year	Cash Stream A	Cash Stream B
   1	$100	$300
   2	400	400
   3	400	400
   4	400	400
   5	300	100

   
   Stream A $   
   Stream B $   
   
2. What is the value of each cash flow stream at a 0% interest rate? Round your answers to the nearest cent.
   Stream A $   
   Stream B $  

Answer 1

a. $otOK2C5UyowAAAABJRU5ErkJggg==$

Formulae:

$jawAAAAASUVORK5CYII=$

b.Value of cash flows at 0% interest rate will be equal to sum of cash flows:

Stream A:$1,600

B: $1,600