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

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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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
 
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