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    Present Value

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    Please help answer the following problems.

    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?

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    https://brainmass.com/business/discounted-cash-flows-model/calculating-a-present-value-problem-274569

    Solution Preview

    Please see the attached file:
    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 ...

    Solution Summary

    This solution helps calculates present value of cash flows.

    $2.49

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