6. Now consider the following schedule of payments:

End of Year Payment

0 2,000

1 2,000

2 0

3 1500

4 2500

5 4,000

a. What is the value of this payment stream at the end of Year 5 if the payments are invested at 10.0 percent annually?

b. What payment today (Year 0) would be needed to accumulate the needed $20,000? (Assume that the payments for Years 1 through 5 remain the same.)