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July 28, 2014

Homework Help: finance

Posted by Peter on Friday, October 23, 2009 at 9:50pm.

John Keene recently invested $3,500 in a project that is promising to return 10.75 percent per year.
The cash flows are expected to be as follows:

End of Cash
Year Flow
1 $750
2 800
3 ???
4 950

Note that the 3rd year cash flow is unknown. Assuming the present value of this cash flow stream is $3,500 (that is, CF0 = -3500), what is the missing cash flow value (that is, what is the cash flow at the end of the 3rd year)?

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