Question
Data Table: Year (t) Cash Flow 1 $700 2 $800 3 $1000 4 $1,500 5 $2,100 a. Determine the present value of the mixed stream
Data Table: Year (t) Cash Flow 1 $700 2 $800 3 $1000 4 $1,500 5 $2,100 a. Determine the present value of the mixed stream of cash flows using a 55% discount rate. b.How much would you be willing to pay for an opportunity to buy this stream, assuming that you can at best earn 55% on your investments? c. What effect, if any, would a 77% rather than a 55% opportunity cost have on your analysis? 1) The present value of the mixed stream of cash flows using a 55% discount rate is $____ 2) The amount you would be willing to pay for an opportunity to buy this stream, assuming that you can at best earn 55% on your investments, is $________ 3) What effect, if any, would a 77% rather than a 55% opportunity cost have on your analysis?
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