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Find the Present Value (PV) and the Future Value (FV) of the following cash flow streams, if the rate of return is 18%.

3. Find the Present Value (PV) and the Future Value (FV) of the following cash flow streams, if the rate of return is 18%.
Year 1 0 60,000
Year 2 0 30,000
Year 3 0 10,000
Year 4 160,000 (60,000)

Year 5 0 0
Year 6 0 40,000

Year 7 0 0
Year 8 0 80,000



Hint: The $60,000 in year 4 is negative!
Using the above information in problem #3., calculate the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI) and the Payback Period for the two cash flows. The initial investment for each cash flow stream is $80,000 (Year 0) and the Cost of Capital is 18%. (50 points
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Finance-8212235.xls

Cash flows
Year
CF1
0
(80,000)
1
2
3
4
160,000
5
6
7
8
NPV
2,526
IRR
19%
PI
1.03
PBP
3.5
Cost of capital CF2
Cum CF1 Cum CF2
(80,000) (80,000) (80,000)
60,000
60,000
30,000
90,000
10,000
100,000...

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