Problem:
Consider the following net cash flows:
Year Cash Flow
0 $ 0
1 250
2 400
3 500
4 600
5 600
Required:
Question 1: What is the net present value if the opportunity cost of capital (discounted rate) is 10 percent?
Question 2: Add an outflow (or cost) of $1000 at Year 0. Now, what is the net present value?
Note: Explain all steps comprehensively.