Let's examine our three year project again when the interest rate is different in each period. We'll consider two scenarios, one in which interest rates are falling and one in which they are rising.

The computation to the left gives the present value of a strem of revenues of $4 million in period 1, $2.5 million in period 2 and $1 million in period 3. The relevant interest rate in period 1 is 10%, it is 7.5% in period 2 and 5% in the final period. How would the same stream of revenue be valued if interest rates were rising?

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