Consider the businesses uneven cash flow analysis presented to you for the various scenarios given below and of course for your calculation:

Show your calculations on this sheet or attach an additional page. (c1,2,3)

Year Cash Flow

0 $2,000

1 2,000

2 0

3 1,500

4 2,500

5 4,000

What is 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 Years 1 through 5 remain the same)?

Time value analysis involves either discounting or compounding cash flows. Many healthcare financial management decisions such as bond refunding, capital investment, and lease buys involve discounting projected future cash flows. What factors must executives consider when choosing a discount rate to apply to forecasted cash flows?