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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