What is the present value of the following cash flow stream at a rate of 12.00%? $$\begin{array} { l c c c c c }
\text { Years: } & 0 & 1 & 2 & 3 & 4 \
\hline \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300
\end{array}$$
?
A) $546.24
B) $402.03
C) $436.99
D) $511.28
E) $441.36

Question

What is the present value of the following cash flow stream at a rate of 12.00%? $$\begin{array} { l c c c c c } 
\text { Years: } & 0 & 1 & 2 & 3 & 4 \
\hline  \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300
\end{array}$$
?
A) $546.24
B) $402.03
C) $436.99
D) $511.28
E) $441.36

Quizplus · Accepted Answer

The present value (PV) of the cash flow stream can be calculated using the formula for the present value of a single cash flow: $$PV = \frac{CF}{(1 + r)^n}$$ where $CF$ is the cash flow, $r$ is the discount rate (12% or 0.12 in this case), and $n$ is the number of periods. Applying this formula to each cash flow:- Year 1: $PV = \frac{75}{(1 + 0.12)^1} = \frac{75}{1.12} = 66.96$- Year 2: $PV = \frac{225}{(1 + 0.12)^2} = \frac{225}{1.2544} = 179.39$- Year 3: $PV = \frac{0}{(1 + 0.12)^3} = 0$ (since the cash flow is $0, its present value is also $0)- Year 4: $PV = \frac{300}{(1 + 0.12)^4} = \frac{300}{1.5748} = 190.64$Adding these up: $66.96 + 179.39 + 0 + 190.64 = 436.99$Therefore, the present value of the cash flow stream at a rate of 12.00% is $436.99.

What Is the Present Value of the Following Cash Flow Years: 01234 CFs: $0$75$225$0$300\begin{array} { l c c c c c } \text { Years: } & 0 & 1 & 2 & 3 & 4 \\\hline \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300\end{array} Years: CFs: ​0$0​1$75​2$225​3$0​4$300​​

What Is the Present Value of the Following Cash Flow $\begin{array} { l c c c c c } \text { Years: } & 0 & 1 & 2 & 3 & 4 \\\hline \text { CFs: } & \$ 0 & \$ 75 & \$ 225 & \$ 0 & \$ 300\end{array}$