(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: Investment A B $ 2,000 $1,000 3,000 1,000 4,000 1,000 (5,000) 1,000 5,000 5,000 (Click on the icon in order to copy its contents into a spreadsheet.) What is the present value of each of these three investments if the appropriate discount rate is 11 percent? End of Year 1 2 3 4 5 $ 4,000 4,000 (4,000) (4,000) 14,000 a. What is the present value of investment A at an annual discount rate of 11 percent?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The
cash flows from these three investments are as follows:
End of Year
1
2
3
A
$ 2,000
3,000
4
5
Investment
B
$1,000
1,000
4,000
1,000
(5,000)
1,000
5,000
5,000
(Click on the icon in order to copy its contents into a spreadsheet.)
What is the present value of each of these three investments if the appropriate discount rate is 11 percent?
с
$
4,000
4,000
(4,000)
(4,000)
14,000
a. What is the present value of investment A at an annual discount rate of 11 percent?
(Round to the nearest cent.)
Transcribed Image Text:(Present value of an uneven stream of payments) You are given three investment alternatives to analyze. The cash flows from these three investments are as follows: End of Year 1 2 3 A $ 2,000 3,000 4 5 Investment B $1,000 1,000 4,000 1,000 (5,000) 1,000 5,000 5,000 (Click on the icon in order to copy its contents into a spreadsheet.) What is the present value of each of these three investments if the appropriate discount rate is 11 percent? с $ 4,000 4,000 (4,000) (4,000) 14,000 a. What is the present value of investment A at an annual discount rate of 11 percent? (Round to the nearest cent.)
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