year Cash Flow 0 2,000 1 2,000 2 0 3 1,500 4 2,500 5 4,000 A). What is the prese

Question

year                                                                Cash Flow

0                                                                       2,000

1                                                                       2,000

2                                                                             0

3                                                                        1,500

4                                                                         2,500

5                                                                         4,000

A). What is the present (year 0) value of cash flow stream if the opportunity cost of rate is 10%

b). What is the future (Year 5) value of cash flow stream if the cash flows are invested in account that pays 10% anually?

c). What cash flow today (Year 0) in lieu of the 2000 cash flow would be needed to accumulatev20000 at the end of year 5 assume the cash flows from year 1 thru 5 are the same.

Explanation / Answer

Answer:A) Present value = $9136.05

Answer:B) Future Value: $14714.22

Answer:C) Cash Flow today: $5282.05

Year Cash flow P.V.F (10%) PV ($) 0 2000 1 2000 1 2000 0.909 1818 2 0 0.8264 0 3 1500 0.7513 1126.95 4 2500 0.683 1707.5 5 4000 0.6209 2483.6 Total 9136.05

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