Find the Present Value of an Income Stream Which Has

question 14

Multiple Choice

Find the present value of an income stream which has a negative flow of R100 per year for 3 years, a positive flow of R200 in the 4th year, and a positive flow of R300 per year in Years 5 through 8.The appropriate discount rate is 4 percent for each of the first 3 years and 5 percent for each of the later years.Thus, a cash flow accruing in Year 8 should be discounted at 5 percent for some years and 4 percent in other years.All payments occur at year-end.

• A) R528.21
• B) R1,329.00
• C) R792.49
• D) R1,046.41
• E) R875.18

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Definitions:

Chemical Secreted into Blood

Substances released by cells or glands into the bloodstream to act on distant target organs or tissues.

Specialized Cells

Cells that have developed distinct characteristics and functions, adapted to perform a specific role within an organism.

Endocrine

Relating to glands that secrete hormones directly into the bloodstream to regulate various bodily functions.

Exocrine

Glands that release their secretions outside the body or into a hollow organ, as opposed to directly into the bloodstream.