A (yearly) cash flow stream is x=(-40,10,10,10,10,10,10). The spot rates are (yearly in percentage) s=(5.0,5.3,5.6,5.8,6.0,6.1).
Use the discount factors to determine the (net) present value of the stream.
(I got a little confused here. Should I
1. use the running present value to solve and get the PV, or
2. use the formula PV=x0 + d1x1 +...+ dnxn)?
Please help. Thank Q!