Consider two cash flow streams, where each will return the ith payment after i years: 100, 140, 131 and 90, 160, 120. Is it possible to tell which cash flow stream is preferable without know- ing the interest rate?

Consider two cash flow streams, where each will return the ith payment after i years: 100, 140, 131 and 90, 160, 120. Is it possible to tell which cash flow stream is preferable without know- ing the interest rate?

EXPERT ANSWER

Cash Flow 1 100, 140, 131 andCash Flow 2 90, 160, 120.

let us assume interest rate is 10% and compounding annually then pv of cash flows as follows
Cash Flow 1

Period	Cash Flow	Present Value
1	100	100
2	140	127.27
3	131	108.26

For the Cash Flow Series PV = $335.54
Cash Flow 2

	Period	Cash Flow	Present Value
	1	90	90
	2	160	145.45
	3	120	99.17

For the Cash Flow Series PV = $334.63