Consider the following uneven cash flow stream: (Hint: Drawing a timeline may help.)

YearCash Flow

Year 0 (Today)$0

Year 1 2,000

Year 20

Year 31,500

Year 42,500

Year 54,000

a.What is the present value (Year 0) of the cash flow stream if the opportunity cost is 10%?

b.Add an outflow (or cost) of $1,000 at Year 0 (Today). What is the net present value if the opportunity cost remains 10% and Year 1 - 5 are unchanged?