Emmy Noether owns stock with a current market price of $100500. The stock pays a dividend at the end of each year that is equal to 3% of the stock's price at the beginning of the year.
For tax-related reasons, Dr. Noether does wish to sell the stock at this time. She decided to enter into a five-year total return equity swap, exchanging her position in the stock for fixed annual payments at a rate of 3% for five years. Over the five year period, the end-of-the-year market prices of the stock were as follows:
bullet $100250 at the end of the first year
bullet $101500 at the end of the second year
bullet $102000 at the end of the third year
bullet $101000 at the end of the fourth year
bullet $99500 at the end of the fifth year
Determine the net cash flow (from Dr. Noether's perspective) at the end of year 5.
The net cash flow at the end of year 5 is $