Consider another set of net cash flows:Year Cash Flow 0 $ 0 1 250 2 4

Consider another set of net cash flows:Year Cash Flow

0 $ 0

1 250

2 400

3 500

4 600

5 600

Year Cash Flow

0 $2000

1 2000

2 0

3 1500

4 2500

5 4000

a. What is the net present value of the stream if the opportunity cost of capital is

10 percent?

b. What is the value of the stream at the end of Year 5 if the cash flows are

invested in an account that pays 10 percent annually?

c. What cash flow today (Year 0) in lieu of the $2000 cash flow would be needed

to accumulate $20000 at the end of Year 5? (Assume that the cash flows for

Years 1 through 5 remain the same.)