Consider the mixed streams of cash flows in the following table Year. Cash flow stream A. B 1. 22500. 7500 2. 18750. 11250 3. 15000. 15000 4. 11250. 18750 5. 7500. 22500 Totals. 75000. 75000
Find the present value of each stream A and B using a 12% discount rate Compare the calculated present values and discuss them in light of the in discounted cash flows totaling 75,000 in each case
Choose correct fill ins . cash flows stream A with a present value of ........is higher or lower than cash flow stream B present value of ......... Because the larger or smaller cash inflows occur in A in the early years when the present value is greater, while the smaller or larger cash flows are received further in the earlier years or future.
Related questions
Straight line depreciation takes the same deduction for each year in the depreciable life of an asset, whereas MACRS is the standard form of accelerated depreciation, resulting in larger deductions in early years and smaller deductions in later years. Both methods result in the same total deductions. What is the most accurate statement about depreciation that follows?
| a. | A business will prefer straight line because it will maximize the present value of cash flow value from depreciation | |
| b. | A business will prefer MACRS because it will maximize the present value of cash flow value from depreciation | |
| c. | A business will prefer MACRS because it will minimize the present value of cash flow value from depreciation | |
| d. | A business will prefer straight line because it will minimize the present value of cash flow value from depreciation |
