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Relationship between future value and present value: Mixed stream. Using the information in the accompanying table,...

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Finance

Relationship between future value and present value: Mixedstream. Using the information in the accompanying table, answer thequestions that follow.

YearCash Flow
00
1800
2900
31000
41500
52000

a.Determine the present value of the mixed stream of cash flows,using a 5% discount rate.

b. Suppose you had a lump sum equal to your answer in part a onhand today. If you invested this sum for 5 years and earned a 5%return each year, how much would you have after 5 years?

c. Determine the future value 5 years from now of the mixedstream, using a 5% interest rate. Compare your answer here to youranswers in part b.

d. How much would you be willing to pay for this stream,assuming that you can at best earn 5% on your investments?

Answer & Explanation Solved by verified expert
4.1 Ratings (717 Votes)
Answer aPresent value of the mixed stream of cash flows 524317WorkingAnswer    See Answer
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