9.3 Consider the following net cash flows:

Year Cash Flow

0$2000

1$2,000

2 0

31,500

42,500

54,000

a.What is the net present 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 flow are invested in an account that pays 20 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 year 1 through 5 remain the same.)