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Higher present value

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Investment X offers to pay you $5,500 per year for nine years, whereas Investment Y offers to pay you $8,000 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5%? If the discount rate is 22%?

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Solution Summary

The solution explains how to determine which investment has a higher present value

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The investments are an annuity and so we use the PVIFA table to get the PV factor
Rate 5%
Investment X - Amount is 5,500 per year and time period is 9 years
PV = ...

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