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You have an opportunity to invest in a business with the following expected cash flows (in $000s): Initial Investment -$40,000 Year 1 - $4,000 Year 2 - $8,000 Year 3 - $24,000 Year 4 - $12,000 If your opportunity cost is 2

Finance Nov 11, 2020

You have an opportunity to invest in a business with the following expected cash flows (in $000s):

Initial Investment -$40,000

Year 1 - $4,000

Year 2 - $8,000

Year 3 - $24,000

Year 4 - $12,000

If your opportunity cost is 2.50%, what is the present value (in $000s) of the cash flow stream from this business over 4 years?

What is the future value (in $000s) of the cash flow stream above from this business over 4 years?

Expert Solution

Present value = $4,674.75 Or $4,675

Future value = $5,160.05 Or $5,160

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