(Additional Questions Next Page)5.You are considering buying a food truck and other equipment to make a littlemoney in the fall and spring. You are projecting that you can generate thefollowing net cash flows after paying operating expenses: $3800 next month and$2800 the following month. Then you will take the winter off and start back upagain next spring, when you hope to earn $2500 6 months from now, $3700 7months from now, and $4500 8 months from now, $3500 9 months from now, and$4500 12 months from now. (Discount the first $3800 1 month, the $2800 2months, etc.) Use a discount rate of 6% per year. Show all work below.What is the present value of this cash flow for the first year of operation? (do theproblem algebraically by hand, then confirm using one of the Excel methods).What is the value of the cash flow (from the food truck problem) if you do notdiscount the numbers?7.Could you use a PMT formula to solve this problem? Why, or why not?6.

Here, Discount Rate is 6% per year Therefore, Monthly Discount Rate is : =6%/12 =0.5%

Answered: You are considering buying a food truck…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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