Question: Given the mixed streams of cash flows shown in the following table, answer parts (a) and (b):
Cash Flow Stream
Year A B
1 $ 50,000 $ 10,000
2 40,000 20,000
3 30,000 30,000
4 20,000 40,000
5 10,000 50,000
Totals $150,000 $150,000
a. Find the present value of each stream, using a 15 percent discount rate.
b. Compare the calculated present values, and discuss them in light of the fact that the undis-counted total cash flows amount to $150,000 in each case.