Monday, December 12, 2011

What is the value of each cash flow stream at a 0% interest rate?

Years Cash Stream A Cash Stream B


1-5 $100 $300


400 400


400 400


400 400


300 100|||They are both the same, $1600. Since the Int rate is zero, you don't discount them because they are worth the same now as in the future.

No comments:

Post a Comment