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Daigo Dojima recently invested $12,300 in a project that is promising to return 7.84 percent per year. The cash flows are expected to be as
Daigo Dojima recently invested $12,300 in a project that is promising to return 7.84 percent per year. The cash flows are expected to be as follows:
Note that the 4th year cash flow is unknown. Assuming the present value of this cash flow stream is $12300 (that is, CF0 = -12300), what is the missing cash flow value (that is, what is the cash flow at the end of the 4th year)?
\begin{tabular}{cc} EndofYear & CashFlow \\ \hline 1 & $3,250 \\ 2 & 1,600 \\ 3 & 1,950 \\ 4 & ??? \\ 5 & 850 \\ 6 & 2,180 \end{tabular}Step by Step Solution
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