Present Value and Multiple Cash Flows
Investment X offers to pay you $2,800 per year for ten years, whereas Investment Y offers to pay you $5,200 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 per cent? If the discount rate is 20 per cent?
PV of 2800 for 10 years at 5%: $____________.
PV of 5,200 for 5 years at 5%: $____________.
PV of 2,800 for 10 years at 20%: $____________.
PV of 5,200 for 5 years at 20%: $____________.