[Troutman85]

Hey everyone,

I’m a little stuck on uneven cash flows for Net Present value calculations. How do we go about selecting the right Present value factor? For example, for a 5 year annuity, payments for the first two years are $30,000 and $50,00 for the remaining 3 years. How do you apply the PV rate?

[gt5717b]

Is this from an MCQ? I've seen MCQs with 2 annual payments of X and a final payment of Y where you take an annuity factor for 2 years on X and a PV factor for 3 years on Y.

Does the question offer multiple PV factors? For 3, 4 and 5 years?

REG - 89
FAR - 84
AUD - 73, 86
BEC - 89

GA Licensed CPA

[gt5717b]

Is this from an MCQ? I've seen MCQs with 2 annual payments of X and a final payment of Y where you take an annuity factor for 2 years on X and a PV factor for 3 years on Y.

Does the question offer multiple PV factors? For 3, 4 and 5 years?

REG - 89
FAR - 84
AUD - 73, 86
BEC - 89

GA Licensed CPA

[thehip41]

Do a 5 year annuity for 30,000

Thats the 30000 from year 1-2 and 30000 of the 50000 from year 3-5

Then you have 20,000, present value of 1 dollar for year 4 and 5

FAR - 83
AUD - 73 92
BEC - 83
REG - 88

Licensed CPA in the state of Michigan

[thehip41]

Do a 5 year annuity for 30,000

Thats the 30000 from year 1-2 and 30000 of the 50000 from year 3-5

Then you have 20,000, present value of 1 dollar for year 4 and 5

FAR - 83
AUD - 73 92
BEC - 83
REG - 88

Licensed CPA in the state of Michigan

[Author]

Replies