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# Present Value

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A. Find the present values of the following cash flow streams at 8% compounded annually.

0 1 2 3 4 5
------------------------------------------------
Stream A \$0 \$100 \$400 \$400 \$400 \$300
Stream B \$0 \$300 \$400 \$400 \$400 \$100

B. What are the PVs of the streams at 0% compounded annually?

##### Solution Summary

This solution helps calculates present value of cash flows.

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a. Find the present values of the following cash flow streams at 8% compounded annually.

0 1 2 3 4 5
Stream A \$0 \$100 \$400 \$400 \$400 \$300
Stream B \$0 \$300 \$400 \$400 \$400 \$100

To calculate the PV ( Present Value) we discount the cash flow at the given discount rate

Stream A

discount rate= 8%

Year Cash flow PV factor @8.% Discounted cash flow=

0 \$0 1 0.00 =0*1
1 \$100 0.925926 92.59 =100*0.925926
2 \$400 ...

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