Question: Now consider the following schedule of payments:
End of Year Payment
0 2,000
1 2,000
2 0
3 1500
4 2500
5 4,000
a. What is the value of this payment stream at the end of Year 5 if the payments are invested at 10.0 percent annually?
b. What payment today (Year 0) would be needed to accumulate the needed $20,000? (Assume that the payments for Years 1 through 5 remain the same.)