Problem 5-2 Present Value and Multiple Cash Flows [LO 1] Investment X offers to
ID: 2639219 • Letter: P
Question
Problem 5-2 Present Value and Multiple Cash Flows [LO 1]
Investment X offers to pay you $7,100 per year for 9 years, whereas Investment Y offers to pay you $9,700 per year for 5 years.
If the discount rate is 8 percent, what is the present value of these cash flows? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
If the discount rate is 20 percent, what is the present value of these cash flows? (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
Investment X offers to pay you $7,100 per year for 9 years, whereas Investment Y offers to pay you $9,700 per year for 5 years.
Explanation / Answer
a.)
b.) Option X
a.)
b.) Option Y
PV X $44,352.90 Y $38,729.29