present value of complex cash flows

q 13

(Present value of complex cash flows) You have an opportunity to make an investment that will pay $300 at the at the end of the fourth year, and $500 at the end of the fifth year a. Find the present value if the interest rate is 7 percent. (Hint. You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the = NPV function in Excel or to use your CF key on a financial calculator-but youll want to check your calculator's manual before you use this key. Keep in mind that with the = NPV function in Excel, there is no initi outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculatori. you should keep in mind that CF0 is the initial outlay or cash flow at time 0 , and, because there is no cash flow at time 0,CF0=0 ) b. What would happen to the present value of this stream of cash flows if the interest rate were zzero percent