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What is the present value of the cash flow stream

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Reference no: EM132390799

Consider the following uneven cash flow stream: (Hint: Drawing a timeline may help.)

Year                                      Cash Flow

Year 0 (Today)                           $0

Year 1                                    2,000

Year 2                                       0

Year 3                                     1,500

Year 4                                     2,500

Year 5                                     4,000

a. What is the present value (Year 0) of the cash flow stream if the opportunity cost is 10%?

b. Add an outflow (or cost) of $1,000 at Year 0 (Today). What is the net present value if the opportunity cost remains 10% and Year 1 - 5 are unchanged?

Reference no: EM132390799

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