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Consider another set of net cash flows: Year Cash flow 0 1,000 1 1,000 2 0 3 1,500 4 2,000 5 3,500 b. What is
Consider another set of net cash flows: Year Cash flow 0 1,000 1 1,000 2 0 3 1,500 4 2,000 5 3,500
b. What is the value of the stream at the end of year 5 if the cash flows are invested in an account that pays 10 percent annually?
c. What cash flows today (time 0), in lieu of the 1,000 cash flow, would be needed to accumulate $10,000 at the end of year 5? (Assume that the cash flows for years 1 through 5 remain the same.).
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