3. economic versus accounting valuation Below are some projected end of period cash flows. Each potential project requires an initial investment of 10,000. For each project determine the value of x such that the project has a present value of precisely 0. Do this for interest rates of r = 9%, 10% and 11%.
Ignore taxes.
t = 1 t = 2 t = 3 t = 4 t = 5 project 1 5,000 5,000 1,000 2,000 x project 2 x 5,000 5,000 5,000 5,000 project 3 3,000 5,000 x 4,000 -3,000

(a) Having done this, what would be the economic income in year 2 of each of the projects?

(b) What would be the accounting income in year 2 if straight line depreciation is used.