Reference no: EM132494711

Year                     Cash Flow ($)

0                            2,000

1                             2,000

2                                0

3                           1,500

4                               2,500

5                                  4,000

Question a. What is the net present value of the stream if the opportunity cost of capital is 10 percent?

Question b. What is the value of the stream at the end of year 5 if the cash flows are in- vested in an account that pays 10 percent annually?

Question c. What cash flow 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.)