A small business earns a baseline profit of $500 a year for 5 years. In addition, its profits increase by $500 each year after Year 1. In Years 4 and 5 the business has some unplanned gains and losses. After the cash flow schedule shown below and at the end of Year 5, the future value of the small business is $2200. Determine the unknown Year 4 cash flow, "CF4", if i = 10%. Year Cash Flow 0 0 1 $500 2 $1000 3 $1500 4 "CF4" 5 -$7500 Group of answer choices $5,291 $7110 $6700 $3196 $5822
A small business earns a baseline profit of $500 a year for 5 years. In addition, its profits increase by $500 each year after Year 1. In Years 4 and 5 the business has some unplanned gains and losses. After the cash flow schedule shown below and at the end of Year 5, the future value of the small business is $2200. Determine the unknown Year 4 cash flow, "CF4", if i = 10%. Year Cash Flow 0 0 1 $500 2 $1000 3 $1500 4 "CF4" 5 -$7500 Group of answer choices $5,291 $7110 $6700 $3196 $5822
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
A small business earns a baseline profit of $500 a year for 5 years. In addition, its profits increase by $500 each year after Year 1. In Years 4 and 5 the business has some unplanned gains and losses. After the cash flow schedule shown below and at the end of Year 5, the
| Year | Cash Flow |
| 0 | 0 |
| 1 | $500 |
| 2 | $1000 |
| 3 | $1500 |
| 4 | "CF4" |
| 5 | -$7500 |
Group of answer choices
$5,291
$7110
$6700
$3196
$5822
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