Question

The present value of a stream of cash flows is just the sum of the present values of each individual cash flow. True False

Answer 1

Answer:

True

Explanation:

In order to find the Present value of multiple cash flows, each cash flow must be discounted to a same point in time and then added together.

Present Value

= (Cash flow 1)/(1 + r)^t1 + (Cash flow 2)/(1 + i)^t2 + (cash flow 3)/(1+i)^t3...... + (Cash flow N)/(1+i)^n

Therefore, The statement is True.