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?

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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

PeriodCash FlowPresent Value
1100100
2140127.27
3131108.26

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

PeriodCash FlowPresent Value
19090
2160145.45
312099.17

For the Cash Flow Series PV = $334.63