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PLEASE WHEN SOLVING THIS PROBLEM SHOW EACH STEP. I WANT TO BE ABLE TO UNDERSTAND THIS PROBLEM AND NOT JUST HAVE AN ANSWER WITHOUT STEPS,
PLEASE WHEN SOLVING THIS PROBLEM SHOW EACH STEP. I WANT TO BE ABLE TO UNDERSTAND THIS PROBLEM AND NOT JUST HAVE AN ANSWER WITHOUT STEPS, SO PLEASE INCLUDE STEPS SO I CAN FOLLOW AND UNDERSTAND. THANKS
Consider another set of net cash flow:
Year | Cash flow |
0 | 1,500 |
1 | 2,000 |
2 | 0 |
3 | 1,500 |
4 | 3,000 |
5 | 4,000 |
- What is the net present value of the stream if the opportunity cost of capital is 11 percent?
- What is the value of the stream at the end of year 5 if the cash flows are invested in an account that pays 11 percent annually?
- What cash flows today (time 0), in lieu of the 2,000 cash flow, would be needed to accumulate $20,000 at the end of year 5? (assume that the cash flows for years 1 through 5 remain the same.)
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