Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 5, Problem 5.31P
Learning Goal 4
P5-31 Value of a single amount versus a mixed stream Gina Vitale has just contracted to sell a small parcel of land that she inherited a few years ago. The buyer is willing to pay $24,000 now, or the buyer will make a series of 5 payments starting now and continuing at annual intervals as shown in the table below. Because Gina doesn’t really need the money today, she plans to let it accumulate in an account that earns 7% annual interest. Given her desire to buy a house 5 years after selling the lot, she decides to choose the payment alternative—either the lump sum or the mixed stream- that provides the higher
| Mixed stream | |
| Time | Cash flow |
| 0 | $2,000 |
| 1 | 4,000 |
| 2 | 6,000 |
| 3 | 8,000 |
| 4 | 10,000 |
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Chapter 5 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
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