Consider another set of net cash flows Year Cash flow 0 $2,000 1 2,000 2 0 3 1,500 4 2,500 5 4,000 a What is the net percent value of the stream if the opportunity cost of capital is 10 percent b What is the value of the stream at the end of Year 5 if the cash flows are invested in an account that ...

a Discount rate 10 Year Cash flow Present value Cf ...

Consider another set of net cash flows: Year.................................... Cash flow 0...........................................$2,000 1.............................................2,000 2..................................................0 3............................................1,500 4............................................2,500 5............................................4,000 a.

Question:

Consider another set of net cash flows:
Year.................................... Cash flow
0...........................................$2,000
1.............................................2,000
2..................................................0
3............................................1,500
4............................................2,500
5............................................4,000
a. What is the net percent value of the stream if the opportunity is 10 percent?
b. What is the value of the stream at the end of Year 5 if the cash flows are invested in an account that pays 10 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).
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...