Uneven cash flow stream
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I need to find the PV of the cash flow streams @ 8% compounded annually. and then (B). is 0 % compounded annually.
Uneven cash flow stream.
A. Find the present values of the following cash flow streams at 8 percent, compounded annually.
0 1 2 3 4 5
__________________________________________________
$0 $100 $400 $400 $400 $300 - STREAM A
$0 $300 $400 $400 $400 $100 - STREAM B
B. What are the PV's of the stream at 0 percent, compound annually?
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Solution Summary
The solution explains how to calculate the present value of an uneven cash flow stream
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The present value is found by multiplying the cash flow by the PV factor. The PV factor is calculated as 1/(1+r)^n.
For Part A, we find the PV factors for the 5 years. These are
1/(1.08)^1= 0.9259
1/(1.08)^2= 0.8573
1/(1.08)^3= 0.7938
1/(1.08)^4= 0.7350
1/(1.08)^5= 0.6806
now multiply the cash flows by the respective factors, you get the following PVs (You can also get the PV factors from the ...
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