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In the time line below, a cash flow of $1,000 occurs at the end of the second period and a cash flow of $400 occurs
- In the time line below, a cash flow of $1,000 occurs at the end of the second period and a cash flow of $400 occurs at the end of the fourth period.
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| $1,000 |
| $500 | |||||
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| 0 | 1 | 2 | 3 | 4 | |||||
The periodic market interest rate is 12%.
- What is the total present value of the combined cash flows at the end of the second period?
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- What is the total present value of the combined cash flows at time 0 (zero)?
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