Consider another uneven cash flow stream:

Year	Cash Flow
0	$2,000
1	$2,000
2	$0
3	$1,500
4	$2,500
5	$4,000

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

b). What is the value of the cash flow 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 $2,006 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.)

d). Time value analysis involves either discounting or compounding cash flows. Many healthcare financial management decisions-such as bond refunding, capital investment, and lease versus buy?involve discounting projected future cash flows. What factors must executives consider when choosing a discount rate to apply to forecasted cash flows?

Answer rating: 100% (QA)

a Year Cash flow PV factor 10 PV 0 2000 1000 2000000 1 2000 0909 1818182 2 0 0826 0000 3 1500 0751 1... View the full answer