Consider another uneven cash flow stream: Year Cash Flow 0 3,000 1 2,000 2...
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Accounting
Consider another uneven cash flow stream:
Year Cash Flow
0 3,000 1 2,000 2 1,500 3 0 4 2,000 5 4,000
a. What is the present (Year 0) value of the cash flow stream if the opportunity cost rate is 8 percent? b. What is the future (Year 5) value of the cash flow stream if the cash flows are invested in an account that pays 8 percent annually? c. What cash flow today (Year 0), in lieu of the $2,000 cash flow, would be needed to accumulate $20,000 at the end of Year 5? (Assume that the cash flows for Years 1 through 5 remain the same.)
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