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5. Suppose you receive the following cash flows: $2,500 year 1; $3,000 year 2; $4,250 year 3: and $5,500 year 4. a. Assuming a discount

5. Suppose you receive the following cash flows: $2,500 year 1; $3,000 year 2; $4,250 year 3: and $5,500 year 4.

a. Assuming a discount rate of 8%, what is the Present Value of the cash flows?

b. Assume you can purchase these cash flows for $12,000, what is the Net Present Value of the investment?

c. What is the IRR of this investment

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