Consider two streams of cash flows, A and B. Stream A's first cash flow is $10,000 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetulty. Stream B's first cash flow is -$8,900, is received two years from today, and will continue in perpetulty. Assume that the appropriate discount rate is 11 percent. a. What is the present value of each stream? (A negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Stream A Stream B b. Suppose that the two streams are combined into one project, called C. What is the IRR of Project C? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Consider two streams of cash flows, A and B. Stream A's first cash flow is $10,000 and is received three years from today. Future cash flows in Stream A grow by 3 percent in perpetulty. Stream B's first cash flow is -$8,900, is received two years from today, and will continue in perpetulty. Assume that the appropriate discount rate is 11 percent. a. What is the present value of each stream? (A negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Stream A Stream B b. Suppose that the two streams are combined into one project, called C. What is the IRR of Project C? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Name: Consider two streams of cash flows, A and B. Stream A's first cash fl
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Description: Consider two streams of cash flows, A and B. Stream A's first cash flow is $10,000 and isreceived three years from today. Future cash flows in Stream A grow by 3 percent inperpetulty. Stream B's first cash flow is -$8,900, is received two years from

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 29P

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