The formula for the present value (PV) of a future cash flow (CF_n) received in year n at an interest rate i is:

Here's how to calculate the present value of the cash flow stream for each interest rate. The formula for the present value (PV) of a future cash flow (CF_n) received in year n at an interest rate i is: PV = (CF_n)/((1 + i)^n) To find the total present value of a stream of cash flows, we sum the present values of each individual cash flow: PV_total = (CF_1)/((1 + i)^1) + (CF_2)/((1 + i)^2) + (CF_3)/((1 + i)^3) Given cash flows: CF_1 = \5,000 (at the end of year 1) CF_2 = \6,000 (at the end of year 2) CF_3 = \8,000 (at the end of year 3) i) Interest rate = 8% Step 1: Convert the interest rate to a decimal. i = 8\% = 0.08 Step 2: Calculate the present value of each cash flow. PV_1 = (5,000)/((1 + 0.08)^1) = (5,000)/(1.08) ≈ 4,629.63 PV_2 = (6,000)/((1 + 0.08)^2) = (6,000)/(1.1664) ≈ 5,143.99 PV_3 = (8,000)/((1 + 0.08)^3) = (8,000)/(1.259712) ≈ 6,350.66 Step 3: Sum the present values to find the total present value. PV_total = 4,629.63 + 5,143.99 + 6,350.66 = 16,124.28 ii) Interest rate = 4% Step 1: Convert the interest rate to a decimal. i = 4\% = 0.04 Step 2: Calculate the present value of each cash flow. PV_1 = (5,000)/((1 + 0.04)^1) = (5,000)/(1.04) ≈ 4,807.69 PV_2 = (6,000)/((1 + 0.04)^2) = (6,000)/(1.0816) ≈ 5,547.34 PV_3 = (8,000)/((1 + 0.04)^3) = (8,000)/(1.124864) ≈ 7,111.96 Step 3: Sum the present values to find the total present value. PV_total = 4,807.69 + 5,547.34 + 7,111.96 = 17,466.99 iii) Interest rate = 12% Step 1: Convert the interest rate to a decimal. i = 12\% = 0.12$ Step 2: Calculate the present value of each cash flow. PV_1 = (5,000)/((1 + 0.12)^1) = (5,000)/(1.12) ≈ 4,464.29 PV_2 = (6,000)/((1 + 0.12)^2) = (6,000)/(1.2544) ≈ 4,783.16 PV_3 = (8,000)/((1 + 0.12)^3) = (8,000)/(1.404928) ≈ 5,694.94 Step 3: Sum the present values to find the total present value. PV_total = 4,464.29 + 4,783.16 + 5,694.94 = 14,942.39