Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling $1,500 would you prefer? The cash flows are listed on order for year 1, year 2 and year 3 respectively.   Select one: a. $300; $500; $ 700 b. $700; $500; $ 300 c. Any OF the above since they all sum to $1,500 d. $500; $500; $ 500

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A: ADF is annuity discount factor. ADF formula is:

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A: Present Value:  The present value is the value of cash flow stream or the fixed lump sum amount at…

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A: Annuities are very important in daily life and also in the retirement also because they provide…

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Q: $500 $500 $500 $500 Year 2 3 i =12% compunded annually B P=?

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A: Payback period is the time required to recover initial investment.

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A: Internal rate of return Internal rate of return refers to the exact return that investment is…

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Q: Please solve using time value of money table. Thank You! t 2 3 4 5 6 $ 100 -1000 400 300 -100 i 2%…

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Q: Draw the cash flow diagram and find the P at year 0 (i=5%) 1 2 3 4 5 50 100 100 100 100

A: PV0 = where,PV0  = Present Value at year 0CF1 to CF5 = Cash Flows from Year 1 to Year 5

Q: Consider the following three cash flow series: End of Year Cash Flow Serles A Cash Flow Series B…

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.