A COMPANY HAS A CASH FLOW STREAMS FROM YEAR 1 TO 3 TO TOTALING 30000. MANAGEMENT HAS PROVIDED YOU WITH THE FOLLOWING INFORMATION TO ASSIST THEM IN CHOOSING THE BEST CASH FLOW STREAMS.

STREAMS YEAR 1 YEAR 2 YEAR 3 TOTAL

A 2500 7500 20000 30000

B 10000 10000 10000 30000

C 20000 7500 2500 30000

D 2500 20000 7500 30000

REQUIRED:

ASSUMING THE INTEREST RATE IS GREATER THAN ZERO. WHICH OF THE CASH INFLOW STREAMS WILL YOU RECOMMEND FOR THE COMPANY AND WHY?

B. IN-CHARGE BANK PAYS 9%, COMPOUNDED DAILY (BASED ON 360-DAYS), ON 8-MONTH CERTIFICATE OF DEPOSIT. ASSUME THERE IS 30 DAYS IN EACH MONTH.

REQUIRED;

HOW MUCH WILL YOU TAKE HOME AT THE END OF THE PERIOD IF YOU DEPOSIT 7500.

C. YOU HAVE BEEN OFFERED AN INVESTMENT THAT WILL PAY YOU 9% PER ANNUM. IF YOU INVEST 15000 HOW LONG WILL IT TAKE YOU TO ACCUMULATE 30000