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

Year Cash Flow

Year 0 (Today) $0

Year 1 2,000

Year 2 0

Year 3 1,500

Year 4 2,500

Year 5 4,000

1. What is the present value (Year 0) of the cash flow stream if the opportunity cost is 10%?
2. 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?

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