Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 8%, then the present value (PV) of this stream of cash flows is closest to ________.
A) $242
B) $581
C) $484
D) $774

Question

Consider the following timeline detailing a stream of cash flows:  If the current market rate of interest is 8%, then the present value (PV) of this stream of cash flows is closest to ________.
A) $242 
B) $581 
C) $484 
D) $774

Quizplus · Accepted Answer

C) PV = 100 /( 1 + 0.08)¹ + 100 / (1 + 0.08)² + 200 / (1 + 0.08)³ + 200 / (1 + 0.08)⁴ = $484.10

Consider the Following Timeline Detailing a Stream of Cash Flows