Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 8%,then the present value of this stream of cash flows is closest to:
A) $22,871
B) $21,211
C) $24,074
D) $26,000

Question

Consider the following timeline detailing a stream of cash flows:  If the current market rate of interest is 8%,then the present value of this stream of cash flows is closest to:
A) $22,871 
B) $21,211 
C) $24,074 
D) $26,000

Quizplus · Accepted Answer

B) PV = 5,000 / (1.07)¹ + 6,000 / (1.07)² + 7,000 / (1.07)³ + 8,000 / (1.07)⁴ = $21,210.72

Consider the Following Timeline Detailing a Stream of Cash Flows