Computation of present value of cash flows

Reference no: EM1312705

I will pay you $40,000 at the end of this year, $30,000 at the end of each of the next three years, and then $20,000 at the end of the fifth year. The interest rate is 5.0% per year.

1. What is the present value of this cash stream?

2. If I borrow the $40,000 at the beginning at 5%, and then reinvest all the proceeds, what is the future value of this cash stream on the date of the last payment?

Reference no: EM1312705

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