is the present value of the following cash flow stream at a rate of 12.0%?
A)$9,699
B)$10,210
C)$10,747
D)$11,284
E)$11,849

Question

Quizplus · Accepted Answer

We can calculate the present value of the cash flow stream using the formula:

PV = CF1/(1+r)^1 + CF2/(1+r)^2 + CF3/(1+r)^3 + CF4/(1+r)^4 + CF5/(1+r)^5

Plugging in the values given in the problem, we get:

PV = 2000/(1+0.12)^1 + 2500/(1+0.12)^2 + 3000/(1+0.12)^3 + 3500/(1+0.12)^4 + 4000/(1+0.12)^5
PV = $10,747. Therefore, the best choice is C.

Is the Present Value of the Following Cash Flow Stream