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You have a choice of accepting either of two 5-year cash flow streams or lump-sum amounts given 2. End of year Cash flow stream Alternative
You have a choice of accepting either of two 5-year cash flow streams or lump-sum amounts given 2. End of year Cash flow stream Alternative I S 7,000 Alternative II S 11,000 2 7,000 7,000 7,000 7,000 Lump-sum amount S28,250 9,000 7,000 5,000 3,000 4 At time zero (t-0) $28,000 Assuming 10 per cent required rate of return, which alternative (I or II) and in which form (Cash flow or lump-sum) would you prefer and why? (LO 3) (2 Marks)
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