Question: 4. Consider another uneven cash flow stream: (5 pts each) JAVAMIT YOUTH HEA 7. Assume a large top cardiac s year that Year Cash Flow

4. Consider another uneven cash flow stream: (5 pts each) JAVAMIT YOUTH HEA 7. Assume a large top cardiac s year that Year Cash Flow enous 0 $2000 1 $2000 2 $0 W $1500 4 $2500 5 $4000 a. What is the present value of the cash flow stream if the opportunity cost rate is 10%? b. What is the future value of the cash flow stream if the cash flows are invested in an account that pays 10% annually? 5. Assume that you just won $35 million in the Florida lottery, and hence the state will pay you 20 annual payments of $1.75 million each beginning immediately. If the rate of return on securities of similar risk to the lottery earnings is 6%, what is the present value of your winnings? (10 pts) 6. Consider the following investment cash flows: Year Cash Flow 0 $1000 1 $250 2 $400 3 $500 4 $600 5 $600 a. What is the return expected on this investment measured in dollar terms if the opportunity cost rate is 10%? (2.5 pts) b. What is the return on this investment measured in age terms? (2.5 pts) c. Should this investment be made? Explain your answer. (3 pts)

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