Question
a. Given the following set of cash flows If your required rate of return is 7% per year, what is the present value of the
a. Given the following set of cash flows
If your required rate of return is 7% per year, what is the present value of the above cash flows? What is the future value of the above cash flows at the end of the 5-year period? Create a dynamic Model for the question using excel to solve for any 5 cash flows.
.b. Now, suppose that you are offered another investment that is identical, except that the cash flows are reversed (i.e., cash flow 1 is 25,000, cash flow 2 is 30,000, etc.). Is this worth more, or less, than the original investment? Why? Make a copy of the first excel model and answer the question.
\begin{tabular}{cc} \hline Period & Cash F \\ \hline & \\ 1 & 45,000 \\ 2 & 40,000 \\ 3 & 35,000 \\ 4 & 30,000 \\ 5 & 25,000 \end{tabular}Step by Step Solution
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