Present valuelong dash—Mixed streams   Consider the mixed streams of cash flows shown in the following​ table,

year A B

1 $37,500 $12,500
2 $31,250 $18,750
3 $25,000 $25,000
4 $18,750 $31,250
5 $12,500 $37,500
Totals $125,000
$125,000

a.  Find the present value of each stream using a 12​% discount rate.
b.  Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $125,000 in each case.

a. The present value of the cash flows of stream A is

​$.

​(Round to the nearest​ dollar.)

The present value of the cash flows of stream B is

​$.

​(Round to the nearest​ dollar.)

b. Compare the calculated present values and discuss them in light of the undiscounted cash flows totaling $ in each case.  ​(Select the best answer​ below.)

A.Cash flow stream​ A, with a present value of $ is higher than cash flow stream​ B's present value of

​$ because the larger cash inflows occur in A in the later years when their present value is​ greater, while the smaller cash flows are received in the earlier years.

B.Cash flow stream​ A, with a present value of $ is higher than cash flow stream​ B's present value of

​$ because the larger cash inflows occur in A in the early years when their present value is​ greater, while the smaller cash flows are received further in the future.

C.Cash flow stream​ A, with a present value of $ is lower than cash flow stream​ B's present value of

​$ because the smaller cash inflows occur in A in the early years when their present value is​ greater, while the larger cash flows are received further in the future.

D.

Cash flow stream​ A, with a present value of $​, is higher than cash flow stream​ B's present value of

​$ because the larger cash inflows occur in A in the early years when their present value is​ greater, while the smaller cash flows are received further in the future.