Question: Comparing Cash Flows 2 Which cash flow would you rather pay, $425 today or $500 in two years 3 if interest rates are 7 percent?

Comparing Cash Flows 2 Which cash flow would you rather pay, $425 today or $500 in two years 3 if interest rates are 7 percent? Why? 4 LG4-5: Move cash flows from one year to another. 5 6 Assumptions: 7 PV 8 FV(2) 9 10 i 11 12 Solution: 13 Calculate PV of FV(2) and compare with payment today. N $425.00 $500.00 14 15 PV of FV(2) 16 Decision: 17 18 2 years 7.00% $500.00

1. Problem 4-24: Comparing Cash Flows 2. Which cash flow would you rather pay, $425 today or $500 in two years 3 if interest rates are 7 percent? Why? 4 LG4-5: Move cash flows from one year to another. 5 Solution: Calculate PV of FV(2) and compare with payment today

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