Assume that your required rate of return is 12% and you aregiven the following s
ID: 2661541 • Letter: A
Question
Assume that your required rate of return is 12% and you aregiven the following streams of cash flow: Year CashFlow 0 $10,000 1 $15,000 2 $15,000 3 $15,000 4 $15,000 5 $20,000 If the payments are made at the end of each period, what isthe PV of the cash flow stream? Assume that your required rate of return is 12% and you aregiven the following streams of cash flow: Year CashFlow 0 $10,000 1 $15,000 2 $15,000 3 $15,000 4 $15,000 5 $20,000 If the payments are made at the end of each period, what isthe PV of the cash flow stream?Explanation / Answer
Year
Cashflows
PV Factor at 12%
Present Values
Year
Cashflows
PV Factor at 12%
Present Values
0 ($10,000.00) 1 ($10,000.00) 1 $15,000.00 0.8929 $13,393.50 2 $15,000.00 0.7972 $11,958.00 3 $15,000.00 0.7118 $10,677.00 4 $15,000.00 0.6355 $9,532.50 5 $20,000.00 0.5674 $11,348.00 Net Present Value $46,909.00 Present Value of the Cash flowStream = $56,909 Net Present Value = $56,909 -$10,000 = $46,909.00